Preamble

The House met at Eleven of the Clock, Mr. SPEAKER in the Chair.

PRIVATE BUSINESS.

Dewsbury and Ossett Passenger Transport Bill.

Lord Amendments considered, and agreed to.

Oral Answers to Questions — POST OFFICE (ADVERTISEMENTS).

Mr. SUTCLIFFE: 1.
asked the Postmaster-General what has been the revenue of the Post Office from the advertisements of patent medicines in books of stamps issued by the Post Office during each of the past three years; whether it is proposed to continue such advertisements; and, if not, on what grounds?

The POSTMASTER-GENERAL (Sir Kingsley Wood): The revenue from advertisements of patent medicines in the stamp bocks is about £530 per annum, of which about £30 per annum is from advertisements of medicines for certain diseases referred to in paragraph 58 (2) of the Report of the Select Committee on Patent Medicines. In view of the Committee's recommendations, I have decided that any future contract for the exploitation of advertisement space in the stamp books shall prohibit acceptance by the contractor of any advertisement for a patent medicine, the terms of which suggest that the medicine has a beneficial effect in respect of the diseases listed.

Oral Answers to Questions — BRITISH ARMY (COURT-MARTIAL SENTENCE).

Mr. LYONS: 5.
asked the Financial Secretary to the War Office whether he will have examination made into the fresh facts that have emerged in the case
of ex-Lieutenant Baillie-Stewart with a view to seeing if any grounds exist for further revision of the case?

The FINANCIAL SECRETARY to the WAR OFFICE (Mr. Duff Cooper): My right hon. Friend the Secretary of State is not aware of any fresh facts calling for a revision of this case. If the hon. Member has any such facts in his possession perhaps he will be good enough to communicate them to me.

Mr. LYONS: I suppose I may take it that every piece of information that has been supplied to the Department has been considered.

Mr. COOPER: Certainly.

ADJOURNMENT (WHITSUNTIDE).

Resolved,
That this House, at its rising this day, do adjourn until Tuesday, 13th June.—[Mr. Baldwin.]

Motion made, and Question proposed,
That this House do now adjourn."—[Sir F. Thomson.]

WORLD ECONOMIC CONFERENCE.

11.8 a.m.

Mr. DAVID GRENFELL: I shall not detain the House unduly in what I wish to say to-day. I am pleased to find that even at this late stage the Chancellor of the Exchequer has been good enough to be present. We desired to say something on the subject of the World Economic Conference a week ago, but owing to other circumstances that was not possible, and we are now taking this opportunity to ask the right hon. Gentleman to help us and the country by making clear what is not fully clear to us at the present time. No apology is required for bringing forward this subject. The peoples of the world are now conscious of daily happenings and are intimately concerned in the solution of the economic problems which vitally affect the life and prospects of all classes in all climes. In the new countries where men are engaged as producers of primary products there is as much anxiety as we find in the older communities whose institutions are in jeopardy. Those who produce suffer because the machinery of commerce is working badly. The fault does not lie in the field or the open spaces, on the high seas, in the depths of the mines, nor in the factories and workshops, but in the centres of control and Government.
It is believed that Governments can correct the faults of the economic system, and it is in this belief that we witness the coming of the first World Economic Conference which, appropriately enough, with its delegations, is to meet in London, this great city which owes its existence, its influence, its pride and pleasure, to commerce. The Conference is a sign of a new awakening and holds great hopes to those who want to see the spread of prosperity, security and peace among men. Is there some ground for such hope? Those who appreciate how high are the obstacles lying on the lines of the political divisions in view of the demands
for political sovereignty do not expect easily to overcome the barriers which are put up to maintain economic sovereignty within the political frontiers of the world. Yet faith and necessity bring the delegations here. They will occupy separate accommodation on the floor of the Conference, they will consult in sections and in groups, but they are to be brought under one roof and must strive to obtain the largest possible unity if they are to gain even partial success.
The Conference is not yet aligned on a common front. Can we succeed in bringing all these forces on to the same lines in order that definite lines of attack may be followed. Military terms will creep in when speaking of the organisation of large and powerful forces, however inappropriate they may be. We speak of the objective and the attack, and for the moment we are not satisfied. Visibility is poor. The general staff is not in full agreement. There is a good deal of back-chat amongst the generals, but we believe that the main plans of the attack have been settled. According to the Committee charged with the preparatory work, the Conference is to examine (1) monetary and credit policy, (2) prices, (3) resumption of the movement of Capttal, (4) restrictions on international trade, (5) tariffs and treaty policy, (6) organisation of production and trade.
Judging from these points set down in the Agenda, one recognises that the attempt is to be made to reconstruct world trade and world conditions and to bring them to a state which will satisfy those who believe that the present economic system is worthy of being reconstructed and maintained; but we are not quite satisfied that that end can be achieved by following a discussion on these particular points. We are confident that the aim of the Conference, and the subjects of discussion must be widened so as to remedy one or two omissions which are vital to the very process of reconstruction, I would quote a few words from the statement by President Roosevelt, to show the significance of the omission and the inadequacy of the Agenda, and to show the view held by that very vigorous and very strong personality. The President shows idealism, good feeling and vision in the statement that he delivered to the world, and I quote these words:
To these ends the nations have called two great world conferences. The happiness, the prosperity, and the very lives of the men, women and children who inhabit the whole world are bound up in the decisions which their governments will make in the near future. The improvement of social conditions, the public preservation of individual human rights, and the furtherance of social justice, are dependent upon these conditions. The World Economic Conference will meet soon and must come to its conclusions quickly. The world cannot wait deliberations long delayed. The Conference must establish order in place of the present chaos by a stabilisation of currencies, by freeing the flow of world trade and by international action to raise price levels. It must, in short, supplement individual domestic programmes for economic recovery by wise and considered national action.
In that wise and intelligent statement there is a sign of hope from America which, without offence, we must say has been too long concerned and satisfied with her own prosperity and security in her position as detached from the rest of the world. But there is a significant omission in the report of the Preparatory Commission, and in the statement of President Roosevelt. The Chancellor of the Exchequer, I know, is entrusted with difficult negotiations and he will not find me adding to those difficulties by anything I shall say, but there is an omission which we cannot fail to note. Not one single word is said about Debts, intergovernmental debts, war debts, allied debts, debts of all kinds, and they really cannot be ignored and left out if the Conference is to achieve its purpose. We have an enormous national Debt which we are bEarlng without complaining, but which does not receive the attention of the outside world to the degree it deserves. We burdened ourselves with much debt in the prosecution of the war. We have to pay out enormous sums of money. Chancellors of the Exchequer for the last 10 years have carried on with titanic energy and courage the task of maintaining our national solvency. We have raised, on an average, nearly £800,000,000 a year for the last ten years, and have paid in interest and Sinking Fund on an average over £300,000,000 a year for the last ten years. We have actually paid into the Sinking Fund for redemption of Debt in that term of years £500,000,000, and yet the nominal Debt to-day stands higher than it did ten years ago, while the actual Debt value in commodities is twice as much as it
was when the debt was contracted. That is the great burden which we are carrying upon our shoulders, but it is easier to carry because we can adjust it to our own person.
But the burden of debts which carry obligations across the political frontiers of the world are much more difficult, and it is not easy to ovErieok this important problem. I should like the Chancellor to say something on this point, if he can; I am sure there is a way of saying these things. Last December this House with remarkable unaimity approved of the payment of over £29,000,000 to the United States. There were very few reservations in the minds of anybody; it was held to be a question of national honour and national necessity to meet the obligation at that time, but there was a hint, most definitely, and I feel sure it was the feeling of the House, that when the payment was made it should be made fairly clear to the United States that the payment could not be repeated in the same form when every instalment became due. Now, we are within a few days when the next instalment has to be paid. Having paid £29,000,000, which cannot have helped America one bit, we have now to prepare to pay £19,000,000 on the 15th June. I should like the Chancellor of the Exchequer to say whether it is not possible to make some suggestion which will relieve us of the responsibility of defaulting and enable these payments to be the subject of agreement at the World Economic Conference, that they should discuss these payments which have burdened us so long and which are largely, almost mainly, responsible for the economic disturbance which we see all around us.
I do not think, however, that the American Debt problem should be tackled as a single problem. It is part of the larger problem of world debts, and there are other countries which are suffering and which are handicapped in their economic outlook and prospects because of these liabilities. When the question of defaulting and repudiation is raised, one is tempted to ask whether these payments are expected to be made for all time, does anybody believe that they can be repeated and continued without end for so long as the nominal debts remain? One does not want to remind America
that we made large advances to them during the 100 years, in which she has achieved the most stupendous economic and industrial progress; that she drew upon the old world for her human material and financial resources. This most striking example of human effort which the world has ever seen has been built up by the aid of the older countries of Europe, and the United States, therefore, should be quite clear on the question of default. There are debts due to this country from certain of the American States at the present time, they are forgotten almost, we want to forget them, but there must be the same disposition to forget debts. Once it is recognised that payment is almost impracticable there should be the same disposition to forget all round.
Let me examine for a moment the effect of these debts and obligations, and the effect of attempts to pay these debts. They have to be paid in gold, in gold francs, gold marks, gold dollars, gold currencies, and one of the first effects of the enormous efforts which countries make to discharge their obligations is the accumulation of gold by creditor countries. Gold, which before had been fairly widely distributed and which has operated as the measure of commodity values, became accumulated in a few countries. It was locked up and hidden away in those countries, kept out of circulation, and countries which lacked gold found it exceedingly difficult to obtain the means of payment. The value of the respective currencies of several debtor countries was lost. Inflation on a large scale took place. That inflation has been more or less stabilised in the case of France. French currency is now deemed to be one-fifth of its previous value as measured in terms of our currency. In the case of Belgium it is one-seventh; in the case of Italy it is about one-fourth. Germany had completely to reorganise in order to give any monetary value to the German mark.
This inflation of currency and the difficulty of making payments is very largely responsible for the fall in world prices. I think they are wrong who urge that the world can be put right simply by attempts to raise world prices and to ignore all other considerations. I am convInced about that. I think the House
should devote itself to that problem today and during the days that remain before the World Economic Conference comes to an end. We find that at the present time wholesale prices in this country are less than they were in 1913. The average wholesale price of food commodities is now 92 per cent. The average wholesale price of materials is about 96 per cent. The gross average of the commodities scheduled, of which we have records, runs to about 95 per cent. of the value of 1913. That is a most significant and important consideration to all of us.
We do know that world production has slightly increased Since 1913, but that world values are lower than they were in 1913. We find that even with a higher production world wages, the earnings of producers of all kinds in all parts of the world, have failed to rise Since 1913. When we take into view the millions of men in all lands, men in the Antipodes and tropical climates, east and west and north and south, who are striving to produce for the benefit of the world, we find that their earnings, because of the fall in prices, are no greater than, if as much as, they were in 1913. If world earnings are no greater, how can the world bear this enormous burden of debts imposed upon it in the last 15 or 20 years? In order to escape from the perils of low prices nations seek to build tariff walls to protect themselves. There is no greater fallacy that that policy.

Sir HERBERT SAMUEL: Is the hon. Member in favour of abolishing tariffs?

Mr. GRENFELL: Yes, quite definitely.

Sir H. SAMUEL: Does he speak for his party?

Mr. GRENFELL: Yes.

Mr. LANSBURY: We voted against them when you voted for them.

Sir H. SAMUEL: I also voted against them.

Mr. GRENFELL: Quantitative regulation is now being tried. But the effect of all these expedients is to reduce the volume of world trade, and the decreased flow of goods in a time of greater productive possibilities must lead automatically to a still further lowering of prices. The figures of world trade have been given to us, and they are astounding. Compared
with 1929, despite these makeshifts and expedients, already the value of world trade has gone down from 100 in 1929 to 35 in 1933. I will put it in another way. The value of all the trade that crossed national frontiers, land and sea, in 1933, was only 35 per cent. of the value of the trade that crossed the same frontiers in 1929. It is down to one-third in the course of four years. The volume of trade has fallen also. We find that although prices have fallen more rapidly than the volume has fallen, there has been a diminution of 25 per cent. in the volume of world trade in those same four years. Men working to produce the world's wealth are receiving less remuneration and their purchasing power is reduced.
In addition there is the action of Governments. I come now to the action of this Government, the responsibility for which they must carry and a responsibility which they must remove from their own shoulders at the earliest possible date in the interests of this country's trade. We have in operation an embargo upon Russian trade. Russia is a country with 160 million people, people like ourselves, human being struggling through the confusion of modern-day politics to find a way out appropriate to themselves, a way compatible with their own history, suitable to their territorial and geographical position. We should have no quarrel with them on that account, provided they conduct themselves towards us as we should conduct ourselves towards them. We insist on that. But there is a petty quarrel between this country and Russia, a thing of false pride more than anything else.
I was told by the President of the Board of Trade this week that the embargo could be lifted immediately if a certain thing happened. One wonders why we sit here and allow unemployment to be increased in this country simply because we cannot make up our mind to do what simple people would do anywhere. Two people, each with his own pride, one waiting for the other to concede the point first. Why cannot we say that Russia and ourselves can resume full international trade by simultaneous action— the lifting of the embargo and the release of the prisoners at the same time. It is simply a matter of false pride and because of it we are losing export trade to the value of £10,000,000 a year with behind
it the regular employment of from 50,000 to 60,000 of our people. We are losing that trade because we cannot afford to do the big thing and the sensible thing even in the difficult conditions of the world of to-day.
Then, we had a little row with Ireland; with people of our own flesh and blood, people some of whose representatives still sit with us here, people many of whom live in this city and work with us day by day. They are trying to solve their own economic problems in a fashion which is peculiar to themselves but what they believe to be the right and necessary fashion. I am told that Polish and German coal is being mined by Polish and German workmen to be sent into Ireland in substitution for the coal which we formerly sent there from this country before this silly business started. We ask that the Irish position should be reconsidered in order that 4,000 or 5,000 British miners may again be set to work to produce coal for our next door neighbours across the Irish sea. This kind of thing has to come before the World Economic Conference. The Irish delegation and the Russian delegation will be there. No longer can we continue the pretence of unity of purpose when we are dividing on such narrow dividing lines. This war of attrition which takes the form of tariffs and regulations and embargos cannot bring the country anywhere. There are no possible victories in a trade war of this kind. All countries will lose. Victories cannot follow on a course of this kind.
I would like to end upon a note which could perhaps come only from this side of the House. We are now about to witness the first World Economic Conference. It will be a precedent of great hope and augury for the future economic organisation of the world. It is, despite all that can be said, an inquest on Capttalism. Capttalism is breaking down. From the ends of the earth men are hurrying to this city to see if they can revive and restore the present economic system. Sir Arthur Salter, an expert who carries a great weight, has told us that we must prepare for an alternative system here and elsewhere throughout the world. I am convInced of that as I can be of anything. World success at this Conference will depend upon the readiness of the world to approach, to
accept, to embark upon the alternative system which must result from this and similar conferences. Where do we stand in this country? Are we prepared to concede something in order to win the success for which we hope? How far are we prepared to go? The Chancellor of the Exchequer is to lead the British deputation and I do not question his ability. I have always had a very high estimate of his intellectual qualities. But I make an appeal to him. I understand his family motto is "Je tiens ferine." I have no doubt he will keep it ever in mind. We ask him to show firmness and persistence in this most difficult situation—firmness expressed not by rigid clenching of the fist and refusal to respond to the friendly pressure of another hand, but firmness that will hold to the main principles of conciliation, co-operation, and mutual recognition. We ask him to be firm always in the determination to join hands in the common task. We ask him to resist every temptation to grasp a temporary advantage at the expense of losing his grip on the greater good which we all desire. I fear I have spoken too long. I ask the Chancellor of the Exchequer and the other members of the delegation and those who consult with them, to go to this Conference in a spirit of adventure, in a spirit not of irresponsibility, but of the larger responsibility which the world situation requires from them.

11.40 a.m.

The CHANCELLOR of the EXCHEQUER (Mr. Chamberlain): We have listened to a speech which has been characterised throughout by lofty tone and by a statesman-like sense of responsibility. I desire to pay my tribute to the patriotism and the good feeling which has characterised the hon. Member's introduction of this most important subject. If there was any part of his speech to which I felt disposed to take exception, it was that passage in which he seemed to assume that wherever a dispute arose between this country and another country we should submit to whatever injuries might be inflicted upon us, and that we should respond to attacks made upon us by others, simply by turning the other cheek and refusing to take any measures of retaliation. Perhaps we may some day arrive at a state of affairs
in which that will be the common practice among individual Christians, but I rather doubt whether the hon. Member who gives expression to these pacific sentiments would be quite so pacific if he himself were exposed to insults or injuries. At any rate I should not like to rely upon it.
Much as all of us, I am sure, regret the economic warfare which has arisen between us and other countries, still we must maintain that warfare so long as it is the other countries who have taken the aggressive and are unwilling to make any sort of reparation or restitution for the wrongs they have done to us. This Government must stand up, not merely for the legal liberties and commercial rights of its people, but for the rights and security of their persons. We cannot view with indifference attacks upon our nationals in other countries when those attacks are really directed towards internal political conditions.
The hon. Member has invited me to give some further information as to the views and policy of His Majesty's Government in entering upon this most important World Economic Conference. If all the nations who are going to attend the Conference were thoroughly agreed as to what they wanted to do, and how they wanted to do it, there would be no need for a Conference at all. The very fact that we are holding a Conference is based upon the supposition that there is not complete agreement, and the purpose of our meeting is to explore the differences which may exist between us and see how far it is possible to bridge them. I submit to the House that if each nation were to begin by laying down, in definite, specific and rigid terms, what it was going to the Conference to get adopted, that would be the worst possible way to approach this task of diminishing such differentiation of views as exists between us. It has always been the practice of British Ministers, to whatever party they might belong, before entering into a Conference to be somewhat reticent about the things that they were going to put forward. At the same time, I do not think there can really be very much doubt in anybody's mind as to the purposes of the British Government in taking part in this Conference, and, if I may say so, it is rather the methods to be adopted that I should desire to say
little about than the objectives, which are already public and which I can very easily summarise once again. Those objectives, fortunately, are common, so far as I know, to most of us in this House, and the agreement which exists here extends to outside this House.
I have seen in the last few days a Memorandum which has been prepared by the General Council of the Trades Union Congress upon the work of the World Economic Conference, which I understand is very shortly going to be made public. I read it with great interest, and, somewhat to my surprise, I found very little indeed in it to which I should be disposed to take any exception, while, on the contrary, there are many passages in it that would seem to me to be almost exactly expressing the views of His Majesty's Government, so that I feel that we may consider that in this Conference we shall be representing nearly the whole nation in the objectives at which we are aiming. I go further, because we discussed these subjects at Ottawa, in conference with the other nations and countries of the Empire, and there again we found that there was the closest possible harmony between us.
I should, I think, be disposed to classify these objectives under three headings. The Agenda which the hon. Member quoted has more than three headings, but I think, for my purpose, I can reduce them to a smaller number than those which he read out. I should put them under the three headings of "Price levels," of "Currency considerations," and of the "Abolition or reduction of the barriers to international trade." I think everything can be really comprised under one or other of those three heads. I take, first, the question of price levels. The hon. Member pointed out that in the last four years international trade has shrunk to a third of what it was, and that prices have fallen to a half, a fall unprecedented in economic history. The result has been most disastrous. In the agricultural countries—indeed, in all countries where agriculture is practised—there has been a very severe fall in the standard of living and, of course, a corresponding drop in purchasing power. Some of the most important customers of the industrial world are the agricultural producers. Probably they are responsible for quite
half, possibly even more than half, the demand for industrial goods, and when you find great agricultural countries such as the South American countries or some of the agricultural countries in Europe suffering from a condition of things in which the prices which they obtain for their production has dropped to one-half what they were four years ago, it is not surprising that that is reflected in the distress of the agricultural countries and in producing of no fewer than 30,000,000 unemployed throughout the industrial world.
It is these considerations which have appealed to His Majesty's Government, as they have evidently appealed to the Trades Union Congress, and have convInced us that the first objective ought to be the raising of world prices to a more satisfactory level and, if possible, their maintenance at something like that level. Now how is that to be done? I have always myself held the view that you could not expect to raise prices by monetary action alone. I have always thought that there were other vital factors entering into the question which could not be neglected and which must, therefore, be taken into account in any effort to bring about an improvement in prices. I am sure that the revival of international trade is essential to the increase of prices, and again I feel that the revival of international trade is largely bound up with the possibility of obtaining political tranquility and the general restoration of international good will and international confidence. Then there is the question of trying to get a closer adaptation of production to consumption.
I cannot help feeling that there is still a great deal of confusion in the minds of many people about this idea of the regulation or adaptation of consumption. It is constantly spoken of as though it consisted solely in restriction of production, and theorists say that, although restriction of production might produce some temporary alleviation of the situation, ultimately it must be a bad thing. Put in that way, yes, but that is not the reality up to which we have to face. The reality is that there is over-production, at any rate at the present time, and that the restriction that is required is restriction of over-production. The question of consumption is the other side of the same
picture. If you increase the capacity for consumption, then you do not require to restrict production, but you may have to expand it, and the process is not solely one of restriction; it is restriction or expansion according as the capacity for consumption varies. The idea that anybody wants to restrict production and leave consumption to take care of itself is an entire fallacy. By all means do everything you can to increase the expansion of consumption, but to allow production to go on unchecked, unregulated, and unplanned in these modern conditions, when in many cases it can almost at a moment's notice be increased to an almost indefinite extent, seems to me to be absolute folly if it is possible to adopt any alternative. By this regulation and planning of international production through agreement among producers themselves, I believe that we can do perhaps more than in any other individual direction to raise prices as we desire to do.
The second objective has relation to currency. What we want to do is to protect the principal currencies of the world from fluctuations having no relation to their intrinsic value, the extent of which cannot be foreseen but which come upon us suddenly and unexpectedly. Fluctuations of that kind are fatal to the ordinary processes of trade. We have done what we can in this country by the instrument of the Exchange Equalisation Account to avoid these unnecessary and undesirable fluctuations in sterling, and of course we shall continue to do that; but we hope in the International Conference, by the exchange of views, to arrive at some agreement among ourselves as to further steps that can be taken leading ultimately to what, of course, we must regard as a complete essential for the thorough restoration of international trade, namely, a stable international money standard. On the nature of that standard no doubt we shall find ourselves in disagreement with hon. Members opposite, but I am not sure that the disagreement is not one rather of practice than of theory. They desire, having raised prices, to keep them stable. So do we. They think that that can be done by a standard linked to a price index of commodities. We do not think that a standard of that kind would
be accepted by the nations of the world or would inspire them with sufficient confidence.
As far as I have been able to judge, there is only one standard which is familiar to everybody, and which would, I think, inspire confidence throughout the world provided certain conditions are observed. That is, of course, the gold standard. Whatever may be the theoretical views about the best standard, obviously in this workaday world we have to try and fix a standard which will be accepted and worked by the nations as a whole. There, I think, we shall find that we must fall back on gold, and in that view the nations of the Empire agree. But before we can go back to any Gold Standard—I am not now, of course, suggesting that we should go back at any particular parity when we do go back—before we can go back at any parity to the Gold Standard we must be satisfied that practical means are going to be taken to insure that the Gold Standard will work and will not be subject to those defects which brought it to the ground not so very long ago. That is a matter of the utmost importance, and I earnestly trust that it is one of those matters to which the Conference will give very serious attention.
The third objective, as I have said, is the removal of abnormal barriers to international trade. I put among those the exchange controls, which are now to be found in some forty countries of the world and which make trade absolutely impossible. We know why these exchange controls are imposed. They are imposed in countries which are nervous about their currencies for the protection of their currencies. They are a symptom and in order to get the symptom removed we must remove the cause, and until we can get some sort of revival of confidence, until we can get the reserves of central banks strengthened where they are weak, and some revival of international lending, I do not see very much prospect of the speedy removal of exchange controls. There again, a meeting of creditor and debtor nations alike will give unexampled opportunities of discussion, and I cannot think that we shall part without having made some substantial and great advance towards a solution of that very difficult problem.
Second only to exchange controls, are restrictions and quotas, which are not
like the regulated production of which I have been speaking on a definite international plan with the assent of other countries; they are arbitrarily put upon industrial products as a sort of measure of protection of a severe kind. I think that I see some yielding in the rigidity of the views as to the necessity of quotas of this kind, and I am not at all without hope that we may find that other nations that have tried this experiment will, for the purposes of better understanding and better feeling between nations, be prepared to relax them. FiNaily, there is the question of tariffs. Some hon. Members seem to think that there is an inconsistency in the attitude of the Government who have been occupied many months in building up tariffs and who now desire other nations to reduce their tariffs. I see no inconsistency myself except of a verbal kind, because everything depends on the size and height of the tariff. We have tried the experiment of leaving ourselves completely open to the importation of foreign goods while others built up walls against us. The result very nearly landed us in disaster, and I think there can be few now who would like to go back, in these days, to the conditions, so called, of Free Trade, but really only of free imports which existed a few years ago.
We do not ourselves desire to make our tariffs of a prohibitive character, and we are quite certain that the continual raising of these walls, until they form no longer a check, but a complete barrier, to the passing of trade over their tops, is a policy which has been injurious not only to countries against which those barriers have been erected but to those which have tried to be self-sufficient within their own walls. After all, creditor nations ought to realise, they must realise anyhow, that commercial debts can only be paid in goods and services, and unless they are prepared to take goods and services they cannot expect to have those debts paid. The revival of trade depends, in my opinion, upon the acceptance of these three main objectives by the Conference. I have very little doubt that there will be a wide measure of agreement upon the main issues; but I daresay that when we come to measures to be taken we may find that a good deal of work will have to be done before we can line up with one another.
There was one observation made by the hon. Member for the Gower Division (Mr. D. Grenfell) which struck me as being particularly happy and to the point when he said delegates would be coming to this Conference with faith and of necessity. That is perfectly true. Necessity drives us all, and all of us realise that now, even after the tremendous shrinkage which there has been, that the shrinkage has not yet ceased, and unless we can put aside something of our prejudices, unless we are prepared, each of us, to give something in order to secure agreement from others —if, in short, this Conference fails to achieve the purposes which have brought it together, amid the expectations and hopes of all the world, then, indeed, it would have been well that the Conference should never have been called. We might despair of emerging in our own time from the depressions and hardships and sufferings from which we hope this Conference may deliver us.
The hon. Member said there was one omission from the Agenda of the Conference. He felt the problem of War Debts was not one which was capable of complete isolation, but was one of the many factors, including debts of other kinds, which affected all and ought to be treated with other factors. The separation of War Debts from the Conference Agenda was inevitable I think, for after all a war debt is not a debt by the Conference as a whole, it is a debt between individual nations and other nations, and can only be settled by negotiations and discussions between debtor and creditor. What have the other 30 or 40 nations to do or to say upon the subject of War Debts? It has to be discussed between the parties concerned. The hon. Member asked me whether I could not make some suggestion which would free us from the necessity of default. The Government of the United States is in full possession already of the views of His Majesty's Government. They were expressed officially in a communication which we made to them when the December instalment was paid. They have Since been further developed in the conversations that took place between the President and the Prime Minister, and if I say nothing more now it is because at this moment any word of mine, however innocuous the intention, might be
the subject of misunderstanding on the other side of the water, and I am not prepared to take any risks of saying anything which might, however inadvertently, prejudice the chance of a satisfactory solution of this very delicate question. But I think we should do well to assume that our difficulties are fully appreciated by the American Government, and that there is no desire on their part to do anything to emphasize those difficulties or which would prejudice the success of the Conference. That is all I feel I can say on the subject of war debts.
The Conference itself, the very greatness of the emergency, the desperate nature of the situation will, I think, put all the delegates in a mood in which they will be disposed to do their best to make the Conference a success. For myself, it is in a spirit of optimism and of confidence that I shall go to the Conference, and I trust the House of Commons will feel that it can approve the account which I have given of the general objectives which we shall pursue, and that it will be prepared to trust us to do our utmost to see that those objectives are attained in whatever way may seem possible to us as the Conference proceeds.

12.15 p.m.

Sir H. SAMUEL: I had not intended to intervene in this Debate, but, after what the Chancellor of the Exchequer has said, I think that those who represent the different views in this House should express their encouragement and good will to the representatives of His Majesty's Government in the very grave task which devolves upon them. In all quarters of this House we have a deep sense of the enormous difficulties that must confront the Conference, and the immense importance to this country, to OUT Empire and to the whole world of achieving a successful result. I believe that the sentiments of the whole country were admirably expressed in the noble form of prayer which was issued by the Archbishop of Canterbury a few days ago to be uttered by the whole nation before the Conference meets. The Chancellor of the Exchequer, as leader of the United Kingdom Delegation, has upon his own shoulders the heaviest responsibility of all. I think that the House today would be well advised not to press
him for any further statement with regard to the question of the War Debts. He knows quite well the feelings which animate this House, and, I think, the country. The President and the people of America are also aware of the sentiments which are entertained here, and no good purpose would be served by any debate, I believe, on this subject at this juncture.
With respect to the objectives of the Conference, on the whole I find myself in concurrence with what the right hon. Gentleman has said, but the question arises whether His Majesty's Government will be able to pursue those objectives with sufficient zeal and energy in view of their own commitments at Ottawa and elsewhere. I noted that the right hon. Gentleman to-day disclaimed any rigid protectionist views, and, indeed, asserted that tariffs which tended to be prohibitive were harmful; but unless a tariff is intended to exclude foreign goods for the sake of giving employment to the people of the country around whose shores it is imposed, what is the use of the tariff? And, as the right hon. Gentleman and his friends have always been strongly advocating the exclusion of foreign goods in order to give employment to our own people, what he has said to-day is really in contradiction of the principles of his own political creed. However, if he now admits that it is an evil and a hardship to a country to exclude from its shores foreign imports, that so far is a gain, and I hope he will bear in mind that view, rather than the contrary view he has so often expressed, when he comes to conduct the affairs of our Delegation at the Conference.
The right hon. Gentlemen mentioned that one of the prime objectives was to secure the removal of restrictions upon exchange, and in that everyone will agree, but the purpose for which restrictions are imposed, namely, the protection of currency, cannot be achieved as long as a country is not allowed to sell its products. It is because various countries in the world are not able to sell their products at remunerative prices, and so obtain an adequate supply of foreign currencies, that they are compelled to impose restrictions on exchange, and, unless greater freedom is restored to international commerce, those restrictions on exchange cannot be re-
moved. If it is attempted to remove them temporarily, the same conditions will return, the same threats will arise to the currencies, the same instability of any standard that is adopted may be repeated, and the present situation will not be relieved. Therefore, the freedom of international commerce is an essential preliminary to any removal of exchange restrictions or the establishment of any stable international exchange.
With respect to quotas, the right hon. Gentleman expressed the hope that other nations which have adopted the quota system will realise how unwise it is. But why only other nations? Only to-day there was circulated to Members of the House a Bill for the application of the quota system to yet another important commodity, that of fish, and as soon as we resume we shall be asked to pass into law a complete and an elaborate system of quotas to be applied to that commodity. The Minister of Agriculture—I have quoted these words in the House before, but they must be quoted again and again, in order to enable the House to realise the essential inconsistency with which the Government enter this Conference—the Minister of Agriculture, speaking at a meeting of the Council of Agriculture for England a few days ago, said:
He was certain that the Government was on the right lines. The organisation of the producers at home and the restriction of imports from abroad were the two cardinal points of their policy, and the restriction by every means, whether by tariff, embargo or quota, would be used.
Is it possible for that policy to be declared by one Member of the Cabinet consistently with what we have heard from the Chancellor of the Exchequer to-day?
On the question in general, I demur from one observation of the Chancellor of the Exchequer, that the task was the adaptation of world production to consumption. I think that that is putting the matter the wrong way about. It should be rather an effort to expand world consumption to meet the new capacities of production. If there is glut, there is glut because of poverty, and the problem is rather to relieve the poverty of so large a part of the world's population in order to increase consumption, and thereby the difficulties of glut and
excess of production would be automatically removed. May I say that I observed with great interest one observation by the hon. Member who opened this Debate in a speech which, if I may be allowed to say so, fully merited the encomiums passed upon it by the Chancellor of the Exchequer. He said, in answer to an interruption of mine, that he and his party were in favour of the abolition of tariffs. That deserves to be noted and recorded, for hitherto hon. Members opposite have repeatedly declared that they were neither Free Traders nor Protectionists and were indifferent to that controversy, as though it did not matter whether we had Protection or Free Trade. It is one thing to say, as we all say—as I say myself—that neither Protection nor Free Trade would be, in itself, a remedy for our social evils, a thing that I have repeatedly asserted, but it is another thing to say that it is a matter of indifference whether we have one system or the other, or that one is not better than the other. At all events, to-day the hon. Member and his colleagues have definitely said that, so far as tariffs are concerned, they are against them.

Mr. LANSBURY: We voted against them when you voted for them.

Mr. T. WILLIAMS: The right hon. Gentleman opposite will surely not forget that this party has been more consistent than his, in not taking part in the Government's tariff policy?

Sir H. SAMUEL: No, Sir, I do not think so. I and my colleagues resigned from the Government on the question of tariffs, and we voted for no Measures except of a purely temporary and exceptional character, for a period of a few months, in order to meet a temporary glut. Hon. Gentlemen opposite have repeatedly given the impression to the country that this was a matter in regard to which they themselves were indifferent. Very many of their colleagues in the constituencies have supported particular tariffs for particular industries, such as iron and steel, in which some of their members were specially interested.
There is a further point, with which I can deal in a word. The Chancellor stated what were the objectives of the Conference. He mentioned several of them, but he omitted one which was re-
ferred to in the statement issued by the Prime Minister and President Roosevelt, at the end of their Conference in Washington. I referred to it upon a previous occasion, but no reply has yet been given by the Government. In the statement which dealt with the purposes of the Conference and declared the views of those two statesmen, this sentence appears:
Enterprise must be stimulated by creating conditions favourable to business recovery, and Governments can contribute by the development of appropriate programmes of Capttal expenditure.
That is a policy which many of us have advocated for a long time past, which advocacy had to be suspended temporarily at the moment of the financial and economic crisis two years ago. In our view the policy should have been resumed long Since. The right hon. Gentleman has not even referred to it. DO the Government as now constituted believe with the Prime Minister that
Governments can contribute by the development of appropriate programmes of Capttal expenditure
to business recovery? If so, what steps are they proposing to take? Are they giving their minds to that aspect of the problem? Are appropriate programmes of Capttal expenditure being developed? If so, what are they, and upon what lines? The House and the country would be very interested to know whether the policy of the Government in that regard is the policy which has been previously declared by the Chancellor of the Exchequer, namely, in substance, that Governments can do very little by Capttal expenditure, that they would only discourage private enterprise, and that the advantage to employment would be extremely small, while the strain upon the national resources would be very high. Is that still the view of His Majesty's Government, or is the view that which was expressed by the Prime Minister in agreement with the President of the United States, that such expenditure is desirable, and that appropriate programmes ought to be elaborated?
For the rest, let me end as I began by expressing what I am certain is a sentiment of every hon. Member, of whatever party or view, that the deep good wishes of the whole House and the whole nation go out to those who represent
this country at the Conference, and to the representatives of other countries, with the earnest hope that they will be able to find some means of rescue from the plight in which our own country and all the countries of the world are now suffering.

12.29 p.m.

Sir STAFFORD CRIPPS: The right hon. Gentleman the Member for Darwen (Sir H. Samuel) has managed, as usual, to skate across the thin ice. He started his speech with the expression that "on the whole" he approved of what the Chancellor said, and, as everybody expected, there followed the expression "but." He has now carefully laid the tracks, so that when the World Economic Conference is over he can either turn to the Chancellor and say "I warned you, I told you so," or else he can say to the country, "I supported the Chancellor; what a great success it has been" —an admirable performance and very like many that we have seen before. He made some comment on our attitude towards tariffs. We have always said, and we say now, that we cannot cope with the present situation either by tariffs or by Free Trade. It is a matter of indifference to us which method Capttalism tries to follow. Neither of them will bring Capttalism out of the wood, or to a successful issue. That is the attitude that we take at the present time.
If there is to be control of foreign trade, far more hopeful lines of control, even for Capttalism, are the lines upon which the right hon. Gentleman the Minister of Agriculture is proceeding, where you have a quantitative control which when the time comes wilt be ready and adaptable to a proper Socialist programme. Therefore, those are lines which we are glad that the Government are adopting. We were delighted to find the Chancellor of the Exchequer has now been converted to the idea of conscious planning and production. The right hon. Gentleman says that he had it long before I did. I accept his statement. The only thing is that he has been very shy in bringing it out. I naturally agree, if he says so, that he had it long ago. We believe that planning should have a different aim to the one in which he believes, but we are in common on planning. The machinery of planning, which the right hon. Gentleman and his col-
leagues are now apparently going to build up, will be useful for the purpose of conversion to Socialism just as it may be useful to State-controlled Capttalism.
I do not want to Bay anything more about the speech of the right hon. Gentleman the Member for Darwen. I want to deal with one or two points made by the Chancellor of the Exchequer. I do not want to enter into any controversy as regards the first point with which he dealt, which was the Russian dispute. Unless we are going to have some world tribunal to decide upon the merits of disputes of this sort, we shall always be coming up against difficulties in which there are two countries taking different views on a particular subject matter, whether stupidly or unwisely; but they do, in fact take different views. Unless there is some method of bringing those two countries together and resolving the difficulty, we shall go drifting on, as we are drifting on now in regard to Russia and Ireland. We are not suggesting to the right hon. Gentleman that he should always give in to every pressure of every foreign country. Nothing of the sort. If the right hon. Gentleman was dealing with a private matter of this kind and he got into a situation such as this, he would not allow, may I say his family, to suffer because he could not bring himself to try to make some reasonable settlement with the other side. We are not asking anybody to make an unreasonable settlement. Try to make a settlement which is reasonable. Surely, when he is not dealing only with his intimate family but with the large family of the nation to which he is in a semi-parental position, it is just as important to make an effort to come to a settlement and to meet the other side—not on the other's terms, but on terms which will be acceptable, eventually, to both sides. So far as we understand at the moment, both sides are holding off from any sort of negotiation or talks, or anything else about the matter. It is a situation that it likely to go on and cause suffering to the families of both nations for some time to come.
The right hon. Gentleman told us that he thought it would be fatal for the delegates to the Conference to commit themselves beforehand to any of the details of what they proposed to suggest, and I do not think we wanted him in any way to commit himself to any details;
but what rather alarmed us, and still alarms us, is the fact that this country has allowed the initiative to pass altogether to America. Apparently, we are now only to follow the suggestions made by President Roosevelt. He is, no doubt, a remarkable man, but is it necessary for him to have the monopoly of initiative at the World Economic Conference? Anyway, the impression that has been given by the reticence of the Government up to date has been that they have no ideas of their own, that they are prepared to follow along the line of suggestions given by President Roosevelt to the Prime Minister, and that they themselves have no constructive policy. The right hon. Gentleman has told us to-day of the objectives, with which I think most people were fairly familiar before, of the Conference in the broadest possible terms. I want to say one or two words about two of those objectives.
In the first place, the right hon. Gentleman spoke about the price level, and mentioned that he had had some communication from the Trades Union Congress—which I have not seen, of course—saying that they broadly agreed with the proposals which the Government were putting forward. No doubt that communication deals with the situation and the programme of the World Economic Conference itself; it is not a suggestion of policy by the Trades Union Congress, but is, no doubt, a commentary upon the preparatory work which the Programme Committee has done, with suggestions in that direction. I want to examine this question of the raising of the price level rather from another aspect, namely, from the point of view of the underlying objective which is in the right hon. Gentleman's mind.
As far as I can understand it, his policy is based upon what the hon. and learned Member for Central Nottingham (Mr. O'Connor) told us about the other day, that is to say, the absolute necessity for the maintenance of profits arising from productive industry. If the right hon. Gentleman is approaching the question from that angle, then he is necessarily approaching it, as I think, indeed, he has implied in his speech, from the angle of restriction. He says he believes that there is over-production at the present time, in other words, that it is necessary to have a restrictive policy
in order to decrease the amount of goods on the market, so that the price may be raised, profits may be higher, and a greater inducement may be offered to the manufacturer to produce the goods, or to the cultivator of the soil or the miner to produce the various raw materials. It is in that fundamental approach that we profoundly disagree with the right hon. Gentleman. We believe that, even in a Capttalist world, it is no good trying to start from that end. It is necessary, as we understood President Roosevelt and the Prime Minister agreed in America, to try first to inject purchasing power into the system by means of forced expenditure of some sort or another, and it is by means of pumping in the consuming power to start with in order to meet production that a revival of the price level will be brought about, if a revival of the price level is believed in. Of course, that is a vital difference, not only as regards technique, but as regards result—

Mr. LEVY: Does the hon. and learned Gentleman really believe that the fundamental principle which he is now enunciating is of any earthly use at all; and does he, further, think that production will continue unless profits are made?

Sir S. CRIPPS: Certainly; I do not find the slightest difficulty in believing that production will continue without profits being made. It is a very simple and easy thing to understand if one studies any co-operative undertaking; and I understand that one of the troubles of the hon. Gentleman and his friends is that these co-operative undertakings, where there are no profit-earning shareholders and no profit-earning directors, have become so powerful that he is afraid of them, and desires to see them suppressed.

Mr. LEVY: Surely, the profits of the co-operative societies are the very thing that the hon. and learned Gentleman objects to being taxed.

Sir S. CRIPPS: No; I am afraid the hon. Gentleman cannot have been present at any of the Debates on the subject. The whole question was whether the mutual surpluses should be taxed. I assure him that they are not profits. He will find, if he studies the matter, that there is an essential difference between
industries which are run for the benefit of the shareholders and industries in which all the consumers share the surplus. That is a very simple but fundamental distinction. I do not, however, want to be drawn off on to that question at the moment. What I was attempting to point out to the House was that in our view any attempt on the lines suggested by the Chancellor of the Exchequer to raise price levels is bound to fail, because he is putting the cart before the horse. Even if it were possible, by price manipulation, to bring about a system of distribution of commodities—which is the fundamental difficulty—it certainly could not be brought about by starting with restriction of production rather than by starting to increase the circulation of consuming power, as President Roosevelt has pointed out.
The other point upon which I want to say a word is in regard to the question of currency. The right hon. Gentleman has told us, of course, that he is eventually going to get back on to gold, subject to many conditions being complied with. As far as we are concerned, we cannot regard with any equanimity the possibility of seeing the Gold Standard as a permanent measure of international values. The right hon. Gentleman, I think, rather sympathises with the view that we take, but he says that the Gold Standard is the only one with which people are familiar, and so it must be adhered to. That may be a typical Conservative argument, but it is not a very helpful argument when the Gold Standard has so sigNaily failed to deal with the difficulties of the post-War world. Directly it came up against any critically difficult time, it broke down, very largely because the different countries of the world, when they were up against some national difficulty, misused the Gold Standard. They did not play the game according to the rules, and, unfortunately, there was no referee to haul them up. If ever a gold standard of this sort is to be inaugurated again, it will be essential to have a referee who has the power of hauling up anybody who disobeys the rules, because, however perfect a system may be devised, it will never be possible, we believe, to get any of the international arrangements to operate, whether economic or disarmament or anything else, until countries are
prepared to surrender some portion of their national sovereignty in the international interest. I know there are very few countries that are prepared to do it, perhaps hardly any, but the more one sees of international conferences and attempts to arrive at international agreement the more one appreciates that, until that fundamental difficulty is got over and people are prepared to give up something of their national independence or sovereignty in order to get the far greater good of international agreement, whenever times of difficulty come, whatever the agreement is, it is liable to be and is in fact torn up, just as in the other matter that the right hon. Gentleman dealt with, the question of international indebtedness.
There was a time when we in this country and other countries talked about the high standard of national honour, when the idea of debt repudiation was looked upon as something that could only be associated with possibly some South American republic or some Eastern European State. People would have held up their hands in horror at the suggestion of this country repudiating a debt for which it was liable by international law. But now we all talk with complete equanimity about not paying on 15th June the £19,000,000 that we owe to America. The Government itself said so in December last in the document to which the right hon. Gentleman referred us to-day. He said this country is not going to pay its debts. The last time it paid it as an instalment of an ultimate settlement. That, in fact, was itself repudiation. This repudiation is not only taking place all over the world in the form of debt repudiation, but, of course, it is also taking place in the form of depreciation repudiation—repudiation by France of four-fifths of her external debt and repudiation by America in the last few weeks of her external gold bond liabilities. It is just as much repudiation as someone saying, "I do not intend to pay you what I owe you." When one is considering the general question of the morality of debt repayment, it seems that the two views nearly always Colncide according as to whether one occupies the position of debtor or creditor. When people owe us debts, whether it is Ireland or Russia or some other country, we express the greatest indignation at their not keeping to their
word. When we owe other people debts, we have the best excuses in the world why we should not pay them.

Mr. JOHN WALLACE: We have always paid.

Sir S. CRIPPS: Certainly, but when we are talking about repudiation we always have the best excuses in the world. I am not minimising the excuses. In the international situation to-day it would be folly for us on 15th June to pay up this debt to America in full. I do not think there is any possible justification for it. What I am suggesting is that, if the whole world is going to embark upon this wholesale repudiation at the whim of the person who owes the debt, who can make a good case or a bad case for it, surely it is time that the World Economic Conference very seriously considered the setting up of some permanent body which should deal with this question of international debt settlement. It has long ago become necessary. We long ago had to set up a bankruptcy court in order that fair dealings might be had by creditors of all sorts and kinds and in order that you might discharge a person from a load of debt once and for all after he had been through the bankruptcy court, and it is only in that way that businesses have been able to survive and the Capttalist system has been able to go forward at all. I am not suggesting the necessity for an international bankruptcy court in so many words, but, unless we can get some form of tribunal which is going to settle between different nations fair dealings in reference to debt payments—because repudiation is taking place in commercial and other debts and difficulty has arisen and has long been prevalent in Germany—we shall certainly get so much friction and so many difficulties arising as regards exchange and currency and other matters in the international field that any possible good that may come out of the World Economic Conference will be entirely thrown away.
After all, we were told by the Prime Minister that it is a condition precedent to the success of the World Economic Conference that the debt question should be settled, that he and Mr. Roosevelt had agreed that that was so, and now here we are 10 days before the Conference starts and 12 days before the date of repayment, and all that the right
hon. Gentleman can tell us is that America is in fall possession of our views. We hope, of course, that something may be done before that date, but, if some decision which is not acceptable to everyone is to be sprung upon the two countries and the World Economic Conference at the very beginning of its meetings, it is going to be an extraordinarily serious risk so far as the Conference is concerned, and I feel it would have been far better weeks and months ago to take the risk of upsetting feeling in America be firmly and decisively stating what we intended to do and what our views were. There would have been time for the excitement to die down before the Conference, and it might have done far less harm. However that may be, I hope the right hon. Gentleman will have success in the negotiations which I am sure are going on and which certainly have our greatest goodwill behind them so far as he is concerned.
We have watched carefully the course of the Disarmament Conference, and we are as convInced as ever that the one essential thing for the success of conferences of that sort is a real determination to co-operate. Machinery and suggestions of every sort and kind can be brought out and put before the Conference but, unless there is the will to override all class and vested interests in the consideration of the problems that come before the Conference, it is impossible in our view for any good to come out of it. The right hon. Gentleman said at the end of his address that necessity had brought this Conference together. I hope he will remember that necessity knows no law, and that the Conference will be free, and will have the courage, to consider alternative means of bringing about a solution of the world problem, because, if they omit to consider those means which we believe to be the right and only means of getting world co-operation, we feel that they will be inevitably destined to failure.

EDUCATION.

12.54 p.m.

Mr. COVE: I desire to raise a matter which is of particular interest to teachers and to the students who are now in the training colleges and universities. I do not propose to discuss the action of the
Department as a whole. I understand that there will be further opportunity of reviewing their actions. I am going to confine myself simply to the issuing of two circulars, Nos. 1427 and 1428. In my opinion, the circulars are ill-timed as far as the students at these colleges are concerned. I happen to be either in direct or indirect touch with almost every training college and university in the country, and I find that the issuing of the circulars when the examinations are about to take place have greatly disturbed, upset and worried the students in the colleges. I am sure that the hon. Member will agree that the anxieties of passing the qualifying examination are bad enough, but when the issuing of the circulars—and I believe that the hon. Member is bound to agree with me—inevitably means unemployment for these students, we can imagine how their anxieties will be increased. As usual, the Circulars are rather cleverly worded. I must pay a tribute to those who write circulars. I always find that they are very interesting if only from the point of view of the cleverness with which they are written.
On the surface, the Circulars appear to be most reasonable in many respects. For instance, there is a plea for uniformity. I have not too much objection to uniformity as a principle, but when I examine the Circulars I am afraid that the uniformity which is suggested will mean an increase in the size of classes and a reduction in the number of teachers employed. I have no objection, and I do not think that any reasonable person can have any objection, to planning the number of teachers who may be required over a series of years. There can be no objection to an attempt to approximate the number of teachers. We have no objection to foresight being applied as far as staffing arrangements are concerned.
I would point out, in passing, that when the Board talks about foresight in planning as regards staffing, it appears to be analagous to Satan rebuking Sin. No local education authority in this country in my judgment, has been as guilty of lack of foresight in respect of staffing as the Board of Education. I have been at pains to look through some of the Circulars which have been issued during the past few years. In 1929 the Board stimulated recruitment into the
profession, and Since 1929 it has urged local authorities to employ and to recruit more teachers. It has asked them to get into touch with the heads of secondary schools and say, "We will welcome your co-operation in getting an increased supply." The Board, and responsible Ministers in the past have approached teachers' organisations and sought their co-operation, which has readily been given, to increase the supply of teachers. As far as I can gather, the colleges were asked to open their doors to a larger number of students, and there must have been, during the last three or four years, 4,000 or more additional students in the training colleges over and above the normal number. Those thousands of students, some of whom are now there, went as additional students at the direct invitation and as a result of the encouragement of the Board. It is rather surprising, on turning up the Circulars, to find that even in the height of the crisis in 1931, in September and October, the Board and its responsible Minister, had no appreciation of the situation as far as the employment of teachers was concerned. So not merely in the past but even recently the Board have shown no provision for the planning for which they are now asking in these Circulars. I think it cannot be refuted that the operative part—if the hon. Member could disabuse my mind of the fact it would help very much indeed—is at the end of paragraph 5 in the Circular to which I now refer. It says:
After making full allowance for these considerations they have come to the conclusion that some reduction in the present number of teachers employed is possible without loss of educational efficiency.
It is clear that this is an economy Circular, and that economy is to be effected at the expense of the employment of some thousands of teachers who are now in the training colleges. I ask the House and the hon. Gentleman and his chief to think of the situation of these students. Many of them have gone into the colleges by means of borrowed money. Many of them have had to borrow money from private and public sources, and now they have been left without any hope of employment. As far as I can see, if the Circulars are rigidly applied and the spirit of them put into operation, there is no prospect of employment for some considerable time ahead. The Government in this respect are actively
creating a frame of mind in the colleges—of which I believe the hon. Gentleman is not unaware—which tends to have less and less respect for ordinary constitutional methods of procedure. I can appreciate that feeling. If I had been faced with a situation of that kind when I came out of college, I think I should have protested vociferously against a breach of faith on the part of the Government. The students went there at the invitation of the Government. The Government asked them to undergo training. They invited them to be prepared to go into this professional work, and now they have suddenly decided to curtail the number of teachers to be employed.
I should like to ask one or two questions of the hon. Member, and I hope that he will be good enough to endeavour to answer them. Will his Department bring pressure on the local authorities who have large classes of 50 or 60, in order that they may reduce them to a lower number? There is one thing that the Department can do. In the profession I think we have 7,000 to 8,000 supplementary teachers. I am not going to say anything about the supplementary teachers, except that they are a cheap form of teacher. They have not qualified in the ordinary way. Will the Parliamentary Secretary give us a promise that the Board will cut off the supply of supplementary teachers? We have also a large number of uncertificated teachers. I would not for a moment suggest that the uncertificated teachers in the schools should be dismissed, but having regard to the fact that we have qualified teachers coming out of colleges, who have spent their own money and have been a cost in some degree to the State, will he announce this morning that the supply of uncertificated teachers in future shall be cut off, and that the supply shall be taken from the normally qualified teachers who go to the secondary schools and then to the training colleges and the universities?
I shall be glad if the hon. Member would tell us how many teachers are now unemployed? I do not merely mean the teachers who came out of the colleges last year, but the total number of unemployed teachers. The Debate will be of use if we can get a reply to these questions. I would like to know what interest the Board are taking in the employ-
ment of the students. What estimate have the Board formed of the number of Students now in the colleges and universities who will be unemployed in September? In other words, have the Board any estimate of the number of teachers from those who are coming out of the colleges next July, who are likely to be employed? Can he forecast what number will be employed at Christmas? Have the Board any idea how long it will take before this surplus will be absorbed? Are the Board satisfied—this is rather an important question—that the 10 per cent. cut about to be made in the total number of infants for next year will meet the reduction required owing to the fall in the number of children in the schools? Let me put it in another way. Will that 10 per cent. cut eventually restore normality? Shall we resume the normal situation so far as the employment of teachers is concerned when the 10 per cent. cut has come into operation? I have some doubts whether the Board have adequately adjusted supply and demand.
Although I quarrel with the general policy of restriction in educational services, I have to recognise that we have an economy Government in power, and I am merely confining myself to the plight of the people to whom I have referred. The problem of the over supply of teachers could be prevented by planning and foresight on the part of the Board of Education. Economy ought not to result in creating a large body of unemployed teachers, who have been trained at great expense to themselves and at some expense to the State. It seems to me that the Board and the Government are now adopting a policy which ought to be completely reversed in the existing situation. This is not the time, from a national point of view, to economise in this direction. I understood from the Chancellor of the Exchequer this morning that one of the great problems that faces this nation, in common with other nations, is the problem of consuming power, the ability of our people to be able to purchase and consume what the world can so easily produce.
Here is a restrictive measure, an economy measure which, from the national point of view, is stupid, and from that angle I would say that it is a false policy. Not only from that angle do I say that it is a false policy, but with the present con-
ditions, with the falling number of children in the schools, and with the adequate supply of teachers, now is the time to put into operation the raising of the school age and to expand the services of education. It would be a wise and expedient policy instead of cutting down the numbers of teachers who will be employed to extend the services in many directions by the establishment of nursery schools, the raising of the school age, continuation work, etc., all of which would decrease unemployment. No one who has read about it, much less those who are in touch with the state of affairs in the distressed areas, can be indifferent to the wastage of adolescent life.
In my own constituency, in common with other constituencies, there are many thousands of young men and young women between the ages of 14 and 18 who cannot get jobs, or even when they have jobs they only have them for a few weeks. They are in and out—blind alley occupations. I was reading the other day and it struck me as very remarkable that not only have you the blind alley occupations which are being entered into more and more by young people, but that rationalisation has affected even the blind alley occupations, and they are becoming fewer and fewer. Therefore, it is a good economic proposition and a good social policy for this country to say: "We will keep the children in school until they can find jobs. We will keep them there by raising the school age to 15, or, alternatively, we will keep them there until they are able to find work." That would give an outlet for the student, who has no hope so far as their occupation is concerned. It is the duty of the State to find these people employment, not to take action which will restrict the number of teachers required. We have heard something about continuity of policy. These students have a right to say that a continued policy should be pursued as far as they are concerned. This is a breach of faith with them, and I ask the Parliamentary Secretary to cancel these restrictive proposals, these economising circulars, and give them some hope that there will be work for them when they finish their training next July.

1.16 p.m.

Sir PERCY HARRIS: The hon. Member has done a public service in raising this matter. Naturally the nation's atten-
tion is concentrated upon world economic problems, but it is wise that a few minutes should be devoted to some consideration of this important domestic affair. The circulars to which the hon. Member has referred have caused something like consternation in the educational world. When my hon. Friend the Member for Birkenhead (Mr. White) asked for information as to the number of teachers who had left college in the preceding July who had failed to obtain employment, he was told that the number was 1,100, but that by no means covers the amount of unemployment there is in the teaching profession. All over the country you will find highly qualified men, thoroughly trained in their profession, who entered it at the request of the Board of Education, without any means of livelihood, and the serious part of it is that these young men are not insured, they have not the unemployment insurance benefit behind them. It is a very serious danger to the community to have these young men and women, intelligent, clever, hanging about street corners doing nothing, it may be preaching discontent, and very often stimulating trouble in the districts where they live.
The Parliamentary Secretary can say that the present administration is not responsible for the position and that it was the action of Sir Charles Trevelyan when he was President of the Board of Education in making an appeal to young men and women to enter training colleges and to the local authorities to provide places for them The Parliamentary Secretary, who was then a private member, did his best to prevent the policy of the then Government coming to fruition. I am not making a personal charge against him and the present administration, but the responsibility is there, and, unfortunately, the action of a previous Government, whether right or wrong, has had a permanent effect. I think that these young men and women have a just grievance against the community. They were asked to enter this great profession and now they find themselves practically thrown on the scrap heap and unable to find employment.

Mr. COVE: I do not think that the hon. Member desires to convey the impression that the present Government are not responsible. Since this Government
came in they have taken action which has encouraged recruitment, but have taken no action when they knew there would be a glut of teachers.

Sir P. HARRIS: I do not want to whitewash the present Government but I want to be scrupulously fair. It is the responsibility of the State. I do not want to concentrate merely on the grievance of these young people but to deal mainly with these unfortunate circulars. The Board of Education has always been fond of issuing circular letters. I suppose they have a number of clever and intelligent young men in the Department who have a literary bent and they have to find them an outlet for their energies. When the Noble Lord the right hon. Member for Hastings (Sir E. Percy) was President of the Board of Education he was very guilty in this respect. They used to come out every month. As soon as one was issued a memorandum had to be published to explain it. I have a great opinion of the present holder of the office. He came in with the good will of the whole country and of educationists in particular. Lord Irwin when he previously occupied the position showed sympathy and understanding with the teaching profession and with education as a whole, and when my friend Sir Donald Maclean died and a successor had to be found it was generally agreed that the Government made a good selection. I beg the President of the Board of Education to keep control over his pamphleteers. If they are to issue circulars let them be clear and decisive so that we may know exactly what they mean. This circular 1428 is exactly what a Government letter should not be. It is confused, involved, apparently ready to wound but afraid to strike, not clear; they are apparently trying to cover themselves from attack, and every other paragraph is a contradiction of the one before.
I will give a little practical advice to the Parliamentary Secretary. He has a good organisation at the Board of Education, a complete staff of inspectors whose business it is not only to inspect schools but to keep in touch with local education authorities, to be their guide, philosopher and friend, and if the President of the Board feels that in any part of the country there is extravagance or inefficiency let him instruct his in-
spectors to discharge their duties and go down to the education committees and put things right. Above all, stop issuing these mischievious circulars which cause so much harm and misunderstanding. If he feels that a particular local education authority has been too generous in its staffing arrangements, or too mean, let him invite the appropriate member, the chairman of the committee, to his presence, they will be willing to come, and by negotiation put the thing right. These general charges of extravagance in staffing or in expenditure are most unfortunate, most discouraging to local education authorities, who are composed of men and women who give their time and labour to the service of education. As a matter of fact, they fail in their object.
The policy initiated by the Noble Lord the Member for Hastings when he was President of the Board was for schemes with a three years' programme. Those three years' programmes remain intact more or less. If it is necessary to amend them or criticise them, is it not better to take each case on its merits, instead of making general charges and sending out special ciroulars? In reference to Circular 1427 the Board apparently adheres to its policy of not having more than 50 in the lower forms and not more than 40 in the senior forms. Of course there must be elasticity. When you come to a country town or a village where the population is scattered, there must be a certain amount of give and take. I suggest that at this time, with so large a number of men and women out of work, it is most unfortunate to suggest that the new senior schools created in some of the county districts, where the population is scattered, should be handicapped by too rigid interpretation of that rule. I understand that it is the policy of the Board still to encourage a reorganisation, the creation of senior schools for young persons over eleven and up to 14 years of age. If that is so, and if the policy is to be a success, do not let us have circulars of this kind.
With reference to the secondary schools, I think this circular is the more mischievous of the two. There is for some reason or other criticism of the advance sixth form work. I am particularly surprised at that criticism coming from a
Conservative President of the Board, and from my hon. Friend the Parliamentary Secretary, because it was laid down in all the discussions between 1929 and 1931 that the State was willing to encourage ability, intelligence and character whenever it was available, and that where there was a child who was likely to get real benefit and go to the University and gain scholarships and so become an asset to the State, the Conservative policy was to give every encouragement and stint no money. Anyone who knows anything about the secondary schools and the public schools knows that if good results are to be obtained in the higher classes, the sixth and upper-sixth, in order to get to scholarship standard there must be specialisation, personal tuition and a certain amount of extra staff. The suggestion that the upper class is to be stinted and starved, or that there is to be a general average and that there should not be a differentiation between the lower and the upper forms, is not only impracticable but is a reactionary suggestion.

he PARLIAMENTARY SECRETARY to the BOARD of EDUCATION (Mr. Ramsbotham): Where is that suggested?

Sir P. HARRIS: In paragraph 6 of the Circular, which says:
The most important of these from a practical point of view is the question of advanced sixth form work, which now tends to absorb the energies of a relatively large number of highly qualified, and therefore highly paid teachers.
Later on the paragraph states:
While it is not true of all secondary schools, it is quite clear that a large number still fail to realise the importance of training their sixth form pupils in habits of independent study. Such provisions would often result in a substantial economy of teaching power.
Of course the whole success of sixth form work is to make a child think for himself or herself and learn to study privately. The advanced student obviously wants more personal supervision and more care than when taught in the lower forms by mass training. It is very difficult to criticise a vague circular covering four pages of this kind, but the general impression left on educationists throughout the country is that the circular is reactionary, and that there is a lack of appreciation of the real problem of education. Paragraph 8 comments on free periods for assistant staffs. There
again, if you are to have good educational work you must have elasticity in the syllabus and confidence in the staff of the schools to use their time with intelligence. If they are to be tied down by red tape the secondary schools for all time will be handicapped compared with the public schools, where there is great freedom for the teaching staff, where there are small classes, more specialisation, and more concentration on scholarship standard.
All these circulars are unfortunate. I do not suggest that they should be withdrawn. Government Departments never withdraw circulars; that is too much to expect from them. But I do hope that the Parliamentary Secretary will attempt to explain them away, that he will give a generous interpretation to their meaning, and set at rest the apprehension in the minds of local education authorities and the teachers throughout the country. The teaching profession and education as a whole have had a bad time for the last 18 months. The policy of cuts was a severe blow, a shock which has not been quite overcome. Then came the abolition of free places in secondary schools and the raising of the fees. That caused a great deal of discontent. I suggest that the great partnership between the Board of Education, the local education authorities and the teaching profession can only be consummated with success by confidence, by personal contact and by good will. That confidence and good will can best be brought about by a change of policy—I will not say a change of heart, because I believe the heart of the President of the Board is all right, but a change of policy as expressed in the official documents of the Board.

1.35 p.m.

Mr. MORGAN: I would like to join in the general criticism that has flown from the hon. Member for Aberavon (Mr. Cove) and the hon. Member for South-West Bethnal Green (Sir P. Harris). Straightaway I say, as a supporter of the National Government who is proud of the Government, that I feel I ought to pay the same tribute as the hon. Member who has just spoken, and say that so far as the Noble Lord who presides over the Board is concerned, and indeed as far as the able representative of the Board in this House is concerned,
as far as their speeches go in, the country, I have nothing but the greatest admiration for them. All friends of education generally rejoice at the tone of those speeches and the conception they have of education generally. We might almost say that we who espouse the cause of education feel that it is good to have two such representatives in charge of the Board.
But I come to the point that the last speaker has just made. These speeches leave me in a perplexed condition when I come to what I call the Board's cold Circulars. I think I can say of the Noble Lord and of the Parliamentary Secretary that they are tantalising in the most original and literal sense of the word. One expects great things from them and then we get a circular like those of which we have heard, which seem to fill their own friends with dismay and cause the enemy to rage furiously. I hope the Parliamentary Secretary will take any criticism which comes from me as being of the most friendly kind. I fervently hope that he will this morning try to make his critics realise that they are imagining vain things. I hope he will tell them and tell us, that these circulars will not perpetuate large classes. I hope he will be able to assure us that they will not aggravate the serious condition of mass unemployment among teachers coming out of the training colleges. In a word, I hope he will be able to tell the critics of the circulars that what they imagine is not true and that things are not quite what they seem. I know that the slogan of the President of the Board is that he has to drive slowly. That, I imagine, is a very good slogan as things are. I do not mind how slowly we drive the educational car as long as we drive it in the right direction.
I come to my main criticism. I believe that these circulars tend to drive the car in the opposite direction and it is that great fear which I should like the Parliamentary Secretary to dispel. As far as his speeches in the country are concerned, we are assured that he is going in the right direction, but the circulars seem to point the opposite way. If I may make a suggestion to him, I should say that now is the time for the Board to take steps to make compulsory what is now only voluntary—to make local education
authorities insist that all children leaving school between the ages of 14 and 15 shall produce some definite evidence of beneficial employment before they are allowed to leave. And if I were to make a constructive criticism with regard to the question of unemployment among teachers, I would say that now is the time for the Board seriously to consider standardising the period of training. It seems to me there should be no difficulty in the Board insisting on a minimum of three years training, I am glad to be able to make these comments and suggestions because I cannot believe that the voices which make the speeches in the country are the voices which dictate these circulars. If the reason for the circular is mere economy I suggest that it is economy in the wrong direction.
I am particularly glad as a supporter of the National Government to be able to make these friendly criticisms I am proud to be a member of the Conservative party and as a lifelong adherent of that party and I rather object at times to the Opposition's suggestion that they alone can look after the cause of education. I have only to read my history, and especially very recent history, to find that no one has done as much for national education as the Conservative party and no one man has ever done more than the late Arthur James Balfour, I beg the Parliamentary Secretary not to give his critics a chance to belabour the present Government but to live up to the traditions of the Conservative party and to allay our fears, criticisms and suspicions. I do not know whether another circular will be forthcoming from the Board—as there was when we had the alteration in the secondary schools—explaining that this did not mean that. But I suggest that the Parliamentary Secretary might possibly think of another circular in which he would say that the Board would insist on smaller rather than larger classes and would indicate that they were taking steps to deal with the grave question of unemployment among teachers.

1.41 p.m.

Miss RATH BONE: The objections to these Circulars have been covered so well by other speakers that I propose only to detain the House very shortly
but as one who is brought into close touch with teachers and with intending teachers, I desire to register my opinion that these Circulars are likely to have bad results in three respects—first, in their effect on the quality of education; second; in their effect as injustices on the teachers and third, in their effects on unemployment. I agree with the hon. Member for South West Bethnal Green (Sir P. Harris) that if there are extravagances in the matter of staffing, and there may be such, it would be better to deal with them by the direct method of intimation from the Board than by these very generalised and rather vague circulars. The general effect of circulars of this kind is apt to be that local authorities already inclined to sluggishness and indifference at once say: "In the interests of national economy, the Board want us to go slow and to cut down and to economise," whereas the keen education authorities, who might in some cases need admonition if they are going too far, decline to pay the least attention and if they are doing the right thing, they are merely discouraged and depressed. I do not think that the method of the circular has proved at all effective in the past and it is liable to cause economy of a kind probably not intended by the President of the Board.
With regard to the admonition on senior classes and sixth forms I think it has been a shock to educational opinion throughout the country to hear it suggested that the adoption of a method of teaching which encourages individual initiative and private study among pupils will decrease the number of qualified teachers employed. It is common knowledge that the more that method is adopted, the greater the number and the better the quality of the teachers necessary. In the second place, I feel that both in these and previous circulars the Board has adopted the principle of making the teachers pay unfairly for the Board's own vacillations of policy.
As previous speakers have said, the principle of change generally has led to a diminution in the demand for teachers. That (has resulted from a, change in Government. The dropping of the proposal for raising the school age, of course, led to a great decrease. But we are continually told in connection with foreign policy that one Government even
if it disapproves of the policy of its predecessors, must in honour observe commitments that have been deliberately made by those predecessors. That principle does not seem to apply to every matter of domestic policy where commitments are made by Departments of State which involve the interests of large bodies of citizens. Only a few years ago many parents were induced to make great sacrifices to send their sons and daughters into the teaching profession, believing that there was going to be an expansion in the demand due partly to the raising of the school age, and partly to the reorganisation scheme and the general improvement of standards. Boys and girls themselves made great efforts to obtain a university education in order to qualify as teachers, and now they find that, through no fault of their own, but because the policy of the Board of Education has changed, there is a greatly decreased demand for their services.
If that was really a matter of national necessity, we should all realise that necessity knows no law and that those who were injured by the change of policy must make their share of the sacrifices demanded of all, but there is an increasing body of expert opinion which altogether denies that it is in the interests of true economy to cut down expenditure upon education. It works uneconomically in two respects. First of all, as regards the teachers themselves, there is a very large number of people who have gone through a long and expensive training, largely at the expense of the public, who now find that that training is of no use. Secondly, with regard to economy leading to larger classes, based upon the diminution in the numbers of secondary schools, we are all faced with the most unfortunate results that are taking place all over the country, in large numbers of young people who are being thrown on to the labour market with no demand for their services. If there is a presumptive future strength of teachers above the estimated number of scholars, it would be better to meet that fact by a policy which encouraged the retention of children at school than by a policy of cutting down the number of teachers.
I think everyone recognises that of all wasteful and demoralising forms of unemployment, the unemployment of young people is the most so. You have boys
and girls turned out of school, generally, I admit, finding employment pretty easily, because, of course, it pays employers to take on younger boys and girls for whom they have not got to pay unemployment insurance contributions, but when they reach the age of 15 or 16, they are turned adrift again, and just at the age when habits of idleness are most dangerous and demoralising, they are thrown on the labour market. If the Government, on the other hand, would meet this apparent glut of teachers by going back to the policy of their predecessors, of adding a year to the school age, it would not only prevent any excess of teachers, but it would prevent this most demoralising unemployment among adolescents and lead to the absorption of a considerable number of adults in employment to take the place of the young people who remained at school.
I should Very much like to know whether the Government, in economising on education, are really encouraged by their own economic advisers. Judging by the public statements of opinion made by some of those very members of the Government's own committee of economists, they would recommend just the opposite course. Many of them- have made their opinion very clearly known that the extension of the school age and of educational facilities so as to prevent unemployment among young people would be an economically sound course for the Government to follow. I hope the Parliamentary Secretary to the Board will be able to give this House assurances which will undo some of the harm which this Circular has done, otherwise we may expect exactly the results that have followed previous Circulars of this kind, namely, the repression and disappointment of the keen education authorities, and encouragement to do badly on the part of the backward authorities.
There may be another result, of which politicians see comparatively little, but of which I see a good deal, because of the particular nature of my constituency, and that is that to an increasing extent the teachers and the future teachers of the country are moving to the left politically, and, worse than that, are becoming inbued with a thorough distrust of political and constitutional methods altogether. If we in the future see a
real increase either of fascism or of Communism in this country, I suspect that we shall have to look for the promoters of that very largely, not to members of the working-classes themselves, but to members of the intelligentsia, who are thoroughly disappointed and embittered and who are beginning to despair, from the experience which they have drawn from their own lives, of justice, or consistency of policy, or of a wide outlook on the part of the Government. It is becoming a very dangerous matter, and many observers who are closely in touch with bodies of teachers are well aware of how especially the younger among them are moving; and I warn the Government that they are making for themselves in the future, if they do not take care, a peculiarly dangerous body of enemies.

1.51 p.m.

Mr. ERNEST EVANS: There are many matters affecting educational administration to which one would like to refer, but the Debate to-day is mainly concerned with the two Circulars recently issued by the Board of Education, and I propose to confine my remarks to those two Circulars. My first comment would be that they seem to be singularly ill-timed. This is a year when there is a very large number of men and women who have gone in for training as teachers, and who have gone in for that training at the instigation of the Board of Education, and it seems to me that it is singularly ill-timed to issue these Circulars in this particular year, from that point of view. It is also ill-timed for another reason. Last Friday my hon. Friend the Member for Carmarthen (Mr. E. T. Evans) put a question to the Parliamentary Secretary with regard to the number of people who had been in training departments in the last five years, and he was told that at English University and University College training departments there had been 6,797, and at Welsh University training departments 1,560. Of those who left in July, 1931, the number who were known to have failed to obtain teaching employment was, in England, 78 and in Wales 47, and of those who left in July, 1932, the numbers were, for England, 256 and for Wales 142. He was also told that the average annual grant in respect of these people during the last five years
was about £366,000. When you are talking about economy and you are expending that amount of money on the training of these people, for whom you cannot find employment, and you find such a large increase in unemployment in two years, it seems to me that it is a very bad time at which to issue these Circulars.
But the matter does not end there. Yesterday I put a question to my hon. Friend, who unfortunately was not in a position to give the figures, but I have the figures which he gave in March of this year, when he pointed out that 1,100 teachers—358 men and 742 women—who left college in the year 1932 had so far failed to obtain employment. I would like to point out that that is not the total of those who failed to obtain employment, because my question was directed to that particular year, but there were others in the previous year and in the year before that who had also failed to find employment. Therefore, I think the present is a very bad time indeed for the Board to issue these Circulars.
There are one or two questions that I would like to ask with regard to the Circulars themselves. In a paragraph in Circular 1428, the Board state that:
their action has in the main been limited to inviting the attention of local education authorities and governors to individual cases of extravagant or insufficient staffing
I wonder whether the Parliamentary Secretary would be good enough to give us a little information as to the complaints which have been received by the Board, presumably from the inspectors of the Board, as to extravagant staffing. My experience is that the local education authorities, on the whole, are rather conservative in the matter of staffing, especially of secondary schools. I do not think that it is fair of the Board to make a general statement of this character unless they are prepared to give us examples and illustrations of the individual centres in respect of which they have received reports of extravagant staffing. That is the matter on which we are entitled to ask for information. At the end of the paragraph there is a statement to this effect:
There is abundant evidence that an economical standard of staffing is fully compatible with the highest standard of efficiency.
That sounds very well, but I should like to know exactly what the Board mean
by it. If they compare, for example, the staffing of the secondary schools with the staffing of the public schools, although those who manage the public schools do not, as a rule, go in for extravagant staffing or expenditure, it will be found that the proportion of pupils and masters in public schools is 50 per cent. lower than it is in secondary schools. They have classes of 20 where the secondary schools have classes of 30. If that be so, I would like to know how the Board reconcile this statement about an economical standard of staffing with the highest standard of efficiency. There is another paragraph of the Circular which seems to me very interesting. It strikes me as very extraordinary that any official of the Board of Education could have committed himself to such a paragraph. Paragraph 6 says:
While it is not true of all secondary schools, it is clear that a large number still fail to realise the importance of training their sixth form pupils in habits of independent study.
On what information is that statement based? I should like to know that very much, for that statement is a complete contradiction of the policy of the Circular because independent study requires many more teachers than form study. Independent study, if properly organised and worked, needs many more teachers because form work is much more easily organised than individual work. That is a fact which is known, I should have thought, in every department of education, and it affects those of us who are concerned with universities. When a student can indulge in research work, he requires much closer attention than does the student attending ordinary classes for the purpose of passing an ordinary degree. I think that both these Circulars will have a bad tendency in encouraging people to believe that there is a large amount of extravagance and waste in our educational system. There are certain people who have thought that for some time, but it is difficult to get them to produce the evidence on which they base their complaints. It is deplorable that the Board of Education should have issued a Circular, the tendency of which, I am sure, will be to give that section of the public the impression that education is a luxury which
is being wastefully administered. Both Circulars have done a great deal to damage education.

2.0 p.m.

Mr. LECKIE: I have listened with reat interest to this Debate on educational matters, and I should like to pay tribute to the ability and moderation with which my hon. Friend the Member for Aberavon (Mr. Cove) and my hon. Friend the Member for Stourbridge (Mr. Morgan) have put their case. There is no doubt that these two Circulars have caused a great deal of anxiety, not only among educational authorities, but among teachers and among students in the colleges. If they stood alone and were the first Circulars to be issued, not so much notice would have been taken of them, but they are the last of many economy Circulars that have been issued by the Board of Education during the last 18 months. When the crisis came about two years ago, the whole educational system was brought to a standstill. The axe came down and stopped all development of every kind. Serious cuts in the salaries of the teachers took place and altogether education was very largely brought to a standstill. There is no doubt that the effect of the work of the Board of Education has been to economise on education, especially so far as local authorities are concerned, and that is why these Circulars are so disconcerting. I should like to call the attention of the House to an answer given by the Parliamentary Secretary yesterday in reply to a question by the hon. Member for Caerphilly (Mr. M. Jones):
The number of classes for children over 11 years of age in public elementary schools, on 31st March in the years 1931 and 1932 containing more than 40 children on the roll was respectively 5,845 and 9,781. My Noble Friend regrets that the figure for 31st March, 1933, is not yet available."—[OFFICIAL REPORT, 1st June, 1933; col. 2081: Vol. 278.]
I should like to call the attention of the House to the enormous increase in the classes. That shows clearly that very serious economy has been going on in the last 18 months, and that there are fewer teachers in the schools than there were 18 months ago. After all the economies that have taken place, real anxiety is caused by the fact that the Board do not appear to be satisfied and are now calling attention to the possibility of further economies. My own view after a good
deal of experience in local education, is that the elementary schools Circular is quite uncalled for. It may have been that it was brought out to pay lip service to the Ray Report, but, if the Board of Education really mean to take this matter seriously and follow it up with administrative action, it will cause great resentment and will interfere very much with the educational work of our local authorities. Something more can be said for the Circular dealing with secondary education and staffing. There again, I know from my own experience that very great economies have been introduced in secondary schools, and I think any excess of staffing is at the present time almost infinitesimal. However, there will be no harm in inquiries being made on those lines. At any rate, I hope the Parliamentary Secretary will give us some assurance that these Circulars do not have a very detrimental effect.
It seems to me that economy in education has already gone too far. Everybody agreed when the crisis was on that it was necessary to economise, but, now that the position is much better, I do feel, as do most educationists, that the time has come for not to go perhaps full steam ahead at any rate for a steady advance and for preparation for more advance on the lines suggested by some of the speakers. In the meantime, I hope that the local authorities will not take these Circulars too seriously, because I cannot believe that the Board of Education, under such an enlightened President and such an enlightened Parliamentary Secretary, will take action further to reduce the efficiency of our elementary and secondary schools by reducing the staff to a dangerous extent. I hope the statement which we are to (hear from the Parliamentary Secretary will give us satisfaction and relief.

2.7 p.m.

Mr. RAMSBOTHAM: I am gradually coming to suspect that it is the policy of hon. Members opposite to discourage the issue of Circulars by the Board of Education by initiating a debate whenever one of them appears. PersoNaily, the effect upon myself is the opposite, because it gives me a welcome opportunity of hEarlng my hon. Friend the Member for Aberavon (Mr. Cove) on his favourite
topic, and on this occasion I have not been disappointed, though he will forgive me for saying of him, as was once said of another speaker, that though his bark was prodigious his bite was antiseptic. The debate has taken Circulars 1427 and 1428 under review. They are circulars concerned with the staffing of the schools. Criticism has been made of the phrasing of the circulars, but at the same time just tributes have been paid to the ability of those who compile them. I can assure the House, and particularly my hon. Friend the Member for South-West Bethnal Green (Sir P. Harris), that there is nothing at all sinister in these circulars, and I hope to show him that a great deal, if not all, of his fears are quite unfounded. They are just straightforward, commonsense and, I might almost say, commonplace pieces of administration, and I might add, for the benefit of the hon. Member for Aberavon, that I cannot help thinking it is rather a pity that the administration when his own Government was in office did not issue similar Circulars.
Circular 1427, in its second paragraph, deals with the system in force up to the present and described as "approved establishments." Prior to 1926 the system of ascertaining and checking the number of teachers in the schools was a meticulous one, which involved examination by the Board and its officers of practically every case, and I am informed that it was thought better to give more discretion to the local authorities and, incidentally, relieve the Board of a certain amount of meticulous and, it may be, excessively bureaucratic work.
In 1926 or shortly thereafter this system of approved establishments, showing the establishment of teachers required for the ensuing year, was instituted. That system has been in operation Since, and is in operation to-day, but it has developed a defect, and the study of this Circular and the Appendix will show very clearly the nature of the defect. In the case of the approved establishments for 1931–32 those submitted by the local authorities showed some 6,000 teachers in excess of the actual number employed on 31st March of that year. That represents a tendency, which has been growing ever Since 1926, for the discrepancy between the approved establishment and the actual numbers to become wider and
wider. It is partly on these figures that the Board frame their estimates, they are the guide to the Board and the Treasury on the amount of the financial grants required in the ensuing year, and when we get such discrepancies as that, and find they are every year getting larger and larger, it is high time to look into the matter. I feel sure that the Liberal party, or at any rate that portion of it which is under the protection of the right hon. Member for Darwen (Sir H. Samuel) will agree with me that careful administration must be a keynote in the educational service, as in any other service. The establishments for 1933–34 have not yet been approved, and as the last detailed survey was made in 1926 surely there is every ground for thinking that it is high time another survey was made in order to get some closer approximation between the approved figures and the figures showing the numbers actually employed.

Sir P. HARRIS: The hon. Member has made a very clear statement. It is quite different from what we gathered from the Circular.

Mr. RAMSBOTHAM: I am much obliged to my hon. Friend. I am almost encouraged to write the circulars myself in future. I will elaborate a little this particular aspect of the purpose of these approved establishments. When we find that the establishments for 1933–34 were only slightly less than the establishments for 1932–33, in spite of the considerable fall in the number of children, it is high time there was a detailed survey of the position so as to find out exactly how we stand. The alternative would be to leave the matter untouched and to disregard the discrepancies.
The third paragraph of the elementary Circular stated that in the matter of future staffing regard should be had to the number of children likely to be in attendance. That is a principle with which nobody could possibly quarrel, because no one would suggest that we should appoint teachers irrespective of the number of children. In view of the figures in the actuary's Report, it is more than ever necessary to preserve this principle, because in three years' time there will be 350,000 fewer children in the schools, and the decline will continue until 1948, when it is said that it will
represent a decline of something like 1,000,000. This kind of disturbance in the general position is in itself a very good reason for the Board making a full review of the situation, because the discrepancy is not arithmetically spread over the whole area. In some areas numbers may rise and in other areas they may fall very sharply indeed. That being so, nobody who has any regard to careful administration could possibly ignore the situation. But the Actuary's report is only one reason for this review, because from the information the Board have already acquired during the past year it is evident that there is quite a considerable lack of uniformity in the various staffing standards of local education authorities. There are very considerable discrepancies.
I do not want to weary the House with any tabulated statement of the kind of things we have found. But I will give one or two instances if hon. Members will bear with me. For instance, in the survey recently undertaken, these examples are shown. In one area there were 20 departments with four teachers for 76 to 100 infants. By way of contrast, in another area there were 26 departments with three teachers for 140 to 175 infants. I have another case here of 60 departments with three teachers and 106 to 130 children of all ages, and another with 67 departments with four teachers for 70 to 90 children. These discrepancies are between one authority and another. Even within the same authority there are similar discrepancies. In one large county borough there is a school of 185 children aged 5 to 11 with five teachers, and another of 198 children of the same age with 7 teachers. That does not mean that we are going to come down to the lowest level. We have to find out the discrepancies, and we want to take as a basis the best authorities, who are very often the most economical, and see how we stand.
It is certainly not the case that the Board has any desire to lower the general standard observed. I have a case here where one authority proposed a staff of 173 last year, and it was represented to them by the Board that the staff was not likely to be sufficient and they were asked to increase it to 180. The point is that with all these discrepancies any good administrator is bound to investigate and
find out the reason. There are reasons in many cases to justify the discrepancy, but we ought to find out what they are, and, if they are not justifiable, they ought to be corrected. I think the question was asked whether we had any intention of encouraging an increase in the size of classes above the present permissible limits. No. The limits at present allowed are, as hon. Members know, in the case of a junior school 50 and for a senior school 40, which are the same limits as were inherited from our predecessors.

Mr. COVE: Is there any intention to reduce the classes?

Mr. RAMSBOTHAM: Pressure is continually being exercised in that direction. Speaking from memory, during the last year I believe that 586 classes of over 50 have been eliminated, and certainly during the last ten years about two-thirds have been eliminated; but, as the hon. Member knows, school buildings are very often so constructed that large classes are unavoidable. We hear a great deal of these large classes, and in that connection I would like to place this on record. We do not hear very much about the small classes. Here are certain figures —and again I apologise for quoting figures. We have 14,000 classes with under 20 children—I am talking of elementary schools—30,000 with from 20 to 30 children, 47,000 with from 30 to 40 children and 51,000 with from 40 to 50 children. Thus, nearly one-third of the total contain fewer than 30, and three-fifths of the total contain fewer than 40. Let us hope that, as a result of the decrease in the number of children to be educated in the next decade, the excessive numbers in classes will be gradually decreased.

Mr. MORGAN: Will the tendency of this Circular be to get the education authorities to standardise all classes?

Mr. RAMSBOTHAM: I think certainly not. The policy is for education authorities to make their own arrangements and look into their classes, and where discrepancies cannot be justified they should be removed. If a school is understaffed rather than overstaffed the Board will endeavour to get the local authority to bring it up to the proper standard. In connection with staffing, I would like to point out—and it is a point of criticism
very often ignored—that the size of classes depends to a great extent on the character of the school. Take a school of 200 which is full and has four classrooms for 50. How can you reduce the classes below 50? One alternative is to reduce the classes to 40, and turn the other children out of the school. If the school is a voluntary one, how are you going to force them to go to the council school against the wishes of their parents? There would be very great difficulty in enforcing that policy wholesale. Can you force the voluntary schools to build? Hon. Members know the difficulty in that connection. If a school is a provided school under the local authority, are you practically to force local authorities to build when in three or four years time the probability is that owing to the fall in the birth rate the accommodation will become redundant? Are you to initiate a great building programme all through the country to meet a temporary and passing emergency? I do not believe that any of these alternatives commend themselves to hon. Members present.

Mr. COVE: Has the hon. Member anything to say about paragraph 5, in which they say that they have come to the conclusion that some reduction in the present number of teachers employed is possible without loss of educational efficiency? Is there going to be a reduction?

Mr. RAMSBOTHAM: I propose to deal with that point when I have dealt with both Circulars in detail. With regard to Circular 1428, hon. Members will recollect that the Hay Committee on the question of secondary schools recommended a ratio of pupils to teachers. The Board has considered that, and has come to the conclusion that the problem is far too complex to deal with in any way except by examining the various factors which make for extravagant staffing with a view to eliminating them where possible. In this Circular 1428 the various factors are enumerated in turn. For instance, reference is made to uneconomical rate of entry. Where there is a single school area it may not be easy to regulate the rate of entry, but in areas with more than one school it is economical to adjust your rate of entry to the size of your forms and, instead of exceeding the numbers in one school, to level them out so that you have economical working among the schools. In
some cases schools may be uneconomically small in size. It may be economical in certain cases to build larger class-rooms. We come next to the subject of private study. From such an eminent educationists as the hon. Member for the University of Wales (Mr. E. Evans) I am surprised to know that private study involves a teacher at the elbow of a private student. Surely the point of private study is to get the pupil into the habit of working by himself so that he is not dependent upon his teacher and can do things for himself. I do not see how you can justify an increase of teachers corresponding to the increase in private study.
Next is the question of sixth form work. It is pointed out that in certain cases there are too many advanced courses. I would like to take this opportunity of repeating something that I have said in the country on this subject. There are certain cases where a number of secondary schools have a variety of courses mostly of the higher certificate type. I suggest that that system might well be rationalised so that one school might get the very best course in a certain subject that could be provided, and another school the best possible specialist course in another subject rather than that all should try to do the work of each other. I think that was what the Circular meant when it suggested that there are too many advanced courses and recommended co-operation between neighbouring schools.
Other suggestions are in connection with too many free periods and too many specialist teachers. Such suggestions are welcomed by the local authorities as a guide for them in calculating their establishments and in making for economical administration. In connection with local authorities, I received the impression from the speech of the hon. Baronet the Member for South West Bethnal Green that local authorities were, like himself, disgruntled by those circulars, that they could not understand them, and that, generally speaking, they had caused un-settlement and annoyance. A journal was put into my hands this morning. It is "Education," organ of the official Association of Education Committees, which, of course, are very responsible bodies. I find this in it:
As to the proposals themselves"—
perhaps the hon. Baronet will take note of this—
they follow very closely the policy of the Association of Education Committees.
There is no suggestion there that the local authorities are disturbed by the circulars. After saying that those proposals were adopted as the policy of the Association of the Education Committees at a special meeting in February last, it goes on to say:
The figures suggested by the Bay Committee as the basis of future staffing find no place in the circular. The staffing of the schools is to be determined largely—generally it is hoped—by consultation between the Board of Education and local authorities. In other words, there is to be an effective co-operation between the central and local authorities in what is a matter calling for attention and indeed for intelligent and elastic co-operation.
That is, in the view of the local authorities, what they are going to get. I am glad to have the opportunity of letting the hon. Baronet know what the effect of the Circulars is on the minds of local authorities, in order to let him see that there is no foundation for his argument. The journal observes with regard to Circular 1428:
There is indeed about the whole circular indication of an elasticity of mind and a desire to be reasonable that makes it almost refreshing to read, in spite of the fact that it deals with a rather cheerless subject.
If the hon. Baronet still preserves his grievance, he had better take it to another quarter than to the local authorities. There is every intention to consider the individuality of the school in each area.
I am surprised at the resolution of the Liberal Educational Advisory Committee. I gather from their resolution that these proposals have tended to reduce the present standards of efficiency and staffing, but I failed to get much evidence from the hon. Baronet of any proposals of that kind. The resolution referred to the business of the Board's inspectors. It said that it is the business of the inspectors to call attention to maladministration by local authorities. It is very unfortunate that words of that kind should be imported into the relationships between the Board of Education and the local authorities. We have worked with the greatest harmony with the local authorities. There is no charge in the Circular, or intended to be made
in it, against the administration of the local authorities with whom we preserve the most amicable arrangements.
We come to the point mentioned by the hon. Member for Aberavon (Mr. Cove) as to the effect of staffing upon the supply of school teachers. I do not wish to make a merely party point. We are much too good friends for that, but I am bound to say that the Administration of 1929 to 1931 "handed the baby" to the present Board of Education to carry. It is perfectly obvious that if legislation upon which you base the demand for more teachers is not carried, that demand is not likely to mature. That Government encouraged teachers in advance to enter the training colleges, but the gamble did not come off, and we are now left to deal with a serious situation. We have taken what steps we could. The hon. Gentleman's Government in 1931 knew that the gamble had failed, but it did precious little to stop the entry of those who had been encouraged, prior to February, 1931, to take up the profession of teacher. Not till December, 1931, when the National Government had been in office for about two months, was it possible to do anything. We stopped the additional places, and we made a 2½ per cent. cut; then, in the following August, we increased the cut to 10 per cent. We have done all that we can without causing undue disturbance or unduly affecting the finances of the colleges, and we hope that by 1935 the position will become normal. My Noble Friend and the Board are well aware of the position, and of the difficulty which many of the students have to face. As regards the trained teachers, so far as I can make out, less than 1 percent. of those who have come out of college are out of employment. There is no other profession which shows such a low rate.
As regards the figures quoted by the hon. Member for the University of Wales, I have said that there were 1,100 unemployed in December last. That represents the number unemployed a few months after leaving college. The figures for the 31st March are not completely available, but such information as I have indicates that that number has been reduced, and one hopes that, as previous experience has shown, we shall get rid of it in the course of the next six or 12 months. The hon. Member for
Aberavon made a point about supplementary and uncertificated teachers. The numbers of these have been falling quite rapidly in the last few years, and they are now falling at the rate of about 600 a year. No question can arise of their being cut off as with a knife. The hon. Member would propose that at this moment an order should be issued that no uncertificated or supplementary teacher should teach in the schools. Time must be allowed. The hon. Member will see from the Circular that the Board have indicated that it is not their intention—

Mr. COVE: I want to cut off the supply.

Mr. RAMSBOTHAM: The Board say in their Circular that they have not in mind a decrease in the present proportion of more highly qualified to less highly qualified teachers. There is no intention of altering the proportion, and the gradual efflux of time will decrease the proportion of uncertificated and supplementary teachers. The hon. Member asked whether I could give any estimate of the number of students coming out from the training colleges who will obtain posts. I have not an accurate estimate, but I may, perhaps, be able to give the hon. Member some figures at a later date.
The hon. Member for Walsall (Mr. Leckie) raised a point with regard to classes over 40, which emerged from a question yesterday. The large increase between 1932 and 1931 in the number of classes containing more than 40 children, amounting to not far short of 4,000, is a purely temporary difficulty, arising from the fact that during the year 1920–21 an abnormally large number of children were born. In 1920 the number was 957,000, as against 692,000 the year before. This produced a "bulge" in the age-group of over 11 to which the hon. Member referred, and in about three years that "bulge" will pass out of the schools, and the situation will be modified. It is purely temporary, and is not due to any special policy of the Board to save money by increasing the size of classes.

Mr. COVE: Will the hon. Gentleman take steps to try to find out how many students are likely to get work in September?

Mr. RAMSBOTHAM: I will let the hon. Member have any information on
that subject that I am able to give; it is a matter which is engaging the attention of the Board. I think I have now answered the main points which have been raised in regard to the Circular, and I very much hope that it is now more comprehensible than it was, and that the misapprehension which apparently existed in certain quarters has been allayed. I would conclude by saying that without circulars of this kind we cannot hope to get a proper and economical administration. If an administration is not economical, it cannot justify itself before this House and the country. We are determined to get economy without the sacrifice of educational efficiency, and it is the business of the Board and of this House to convInce the country that the social service of education is, as far as possible, yielding full value for every penny that is being spent upon it.

TRADE AND COMMERCE (JAPANESE COMPETITION).

2.41 p.m.

Mr. LEVY: When, on Monday last, I said I would raise to-day the question of Japanese competition, I was not speaking in any unfriendly spirit towards my hon. and gallant Friend the Secretary to the Overseas Trade Department, and I am sure he realises and appreciates that that is the case. Nor am I raising this matter in any unfriendly spirit towards Japan as such. But we have to realise that here we are up against an economic peril, an economic menace, and, after all, self-preservation is the first law of nature. Let me try to put the matter in its true perspective, to give a correct picture of it. There are two things which count with me as a business man—on the one hand, facts, and, on the other hand, the results. In approaching this problem we have to diagnose what is the cause, what is the effect, and what is the cure.
I would ask my hon. and gallant Friend not to deal with this matter from the point of view of money value; the problem has to be approached from the point of view of volume. To give an elementary illustration of what I mean, if in one year you import 50 horses at £10 each, their value will be £500, and if in the next year you import 500 horses at £1 each, the value is still £500. The ministerial point of view is that the
imports are £500 in either case, and, therefore, there is no difference, but, while in the first year the imports may not necessarily affect, say, the horse-breeding industry, in the subsequent year they might materially affect, and even close down, that industry if they continued at the same rate.
Although Japan is an Eastern country, we have to recognise that it has adopted Western methods. Let us admit at once that the Japanese people are highly skilled, highly developed, highly industrialised, hard-working, thrifty people, and are also exceedingly intelligent. They work exceedingly long hours for very little pay. They work 60 hours a week, six days a week; there is no half-holiday, but simply one day's rest on Sunday. They work their machines in two shifts, so that their machinery is going 120 hours a week. Their standard of living is very low. I am not complaining. It is, if I may say so, nothing to do with this country what is their standard of living, what are their hours of labour, or what is their pay. But we must recognise the competition that we are up against, and we must take some measures to prevent this menace, which is going to jeopardise the various industries in this country.
Furthermore, there is the depreciation of the currency in Japan. The yen today is worth 14d., whereas the normal price is 2s., or 25d. My hon. and gallant Friend may say that, when the currency gets back to normal, it will help to alleviate this competition, but such an argument reminds me of the old saying that while the grass grows the cow starves, and, when the grass has grown, the cow is dead. It we wait until the currency gets back to normal, our industries in the interim will surely suffer, and may well become extinct. It does not only apply to this country. No European country can compete with the conditions that now exist. Furthermore, Japan is not only entering into competition with this country, but is taking away our markets, not only in the Dominions, Colonies and Protectorates but also in other parts of the world. I understand that the Minister is in negotiation with the Japanese Ambassador. I want him to enter into negotiations with the Dominions and Colonies and other countries at the World Economic Conference.
Something has got to be done. It is urgent. One method that could be applied is that of quantitative restriction, and I suggest that we should start on the 1930 basis. The year 1929 was one of our peak years, but, with regard to the cotton trade, we have to remember the boycott in India, where English manufacturers were kept out and the Japanese got a very much stronger hold than they ordinarily would have done.
The arguments and figures that I am going to give apply to all Japanese industries—to rubber goods, to toys and particularly to textiles. In 1930, Great Britain exported to all parts of the world, including Empire markets, 59,750,000 square yards of rayon pieces. Rayon is a commodity which is taking the place of our cotton goods because of its cheapness. In 1932, we only exported 46,250,000 square yards. Compare that falling off of 20 per cent. with the alarming Japanese increase. In 1930 Japan exported to countries in the Empire market alone 45,250,000 square yards, and in 1932, 76,250,000 square yards, an increase of nearly 70 per cent., while to the whole world in 1932 she exported 152,638,000 square yards. She is relentlessly crushing us out of markets which used to be especially our own customers and, what is more significant, the markets of our own kith and kin. The rapidity of this onslaught can be gauged by these few figures. Japan exported to India in 1930 24,750,000 square yards, in 1931 42,500,000 square yards, and in 1932 50,750,000 square yards; to East Africa 716,000 square yards in 1930, 1,942,000 in 1931 and in 1932 over 3,000,000 square yards; and to South Africa 973,000 in 1930, and 6,133,000 in 1931 and a similar quantity in 1932. To other parts of Africa in 1930 they only exported 69,000, but in 1931 343,000 and in 1932 5,250,000 square yards. To Australia and New Zealand the figures are practically the same. They are claiming all our markets, whereas our trade is decreasing.
I want to give the House something which I consider extraordinary, because there is no reciprocal treatment in the illustration that I intend to give. Jamaica used to be one of our markets. In 1930 Japan exported to Jamaica only £8,000 of goods, in 1931 £23,000, and in 1932 £83,000. The total Japanese exports
of goods and commodities to Jamaica in 1932 amounted to £183,000, while the only purchases that Japan made from Jamaica were £140. Those we can imagine to be what travellers bought to take home, and they cannot be considered as real export figures. These figures are reported in the issue of the "Daily Gleaner" of the 21st February and were quoted by a deputation from the Jamaica Imperial Association to the Governor General at an interview granted by him. In 13 countries of the Empire the balance of trade is visibly in favour of Japan. In 1929 they exported £26,000 worth of goods to Jamaica and there were no exports from Jamaica to Japan. In 1930 Japan exported £34,000 worth, and only £225 worth were exported to Japan. In 1931 Jamaica took £52,000 worth of goods from Japan, and there was no export to Japan. In 1932 they took £183,000 worth from Japan and only exported £144 worth to Japan. Jamaica used to be one of our markets. Is it fair that we should take their goods when Jamaica buys goods from Japan and nothing from us? There is something wrong somewhere. I would also call attention to Trinidad. I only mention two of the countries, but in regard to the other countries the position is similar. In 1929 Trinidad took from Japan £24,000 worth of goods, and there was no export to Japan. In 1930 they took £28,000 worth and again there was no export to Japan; and in 1931 they took £47,000 worth from Japan and only exported £350 worth to Japan.
The total imports into United South Africa from Japan in 1933 amounted to £2,500,000, and United South Africa only exported to Japan £101.000 worth of goods. These figures are fantastic. They are amazing. I call the attention of the hon. and gallant Gentleman the Secretary to the Overseas Trade Department to those figures because something really has to be done. In an earlier speech which I made on the floor of the House I called attention to the damage which was being done to the silk manufacturers in this country, and showed how the Japanese came over here, copied our designs, took them to Japan, reproduced them and sold them to us at very considerably less than the cost price here. I will give some details as to how Japan is affecting this country, apart from the Dominions and the Colonies, in the markets of the world.
In 1931 the Japanese export of rayon to this country was only 18,000 square yards. In the first half of 1932 it was 16,000 square yards, in the second half of 1932, 240,000 square yards, and in the first three months of 1933 it was 157,500 square yards, or at the rate of 600,000 square yards per annum. I think I have said enough to show that this economic peril is real and progressive. It has to be tackled. Unless it is tackled our manufacturers will have to close down. It is impossible to compete. It is no use waiting until the yen appreciates in value or until Japan has decided to work shorter hours and give her workpeople more money and raise the standard of living.
The matter is urgent and has to be tackled now. The opportunity is here with the World Economic Conference, and, unless our Ministers can come to some arrangement to the material advantage both of Japan and this country, there can be no alternative but to put a quantitative restriction upon goods coming into this market, and certainly with regard to the Dominions and the Colonies. If the Dominions and Colonies intend to follow out the spirit of the negotiations which took place at Ottawa, I say to them with all respect and with diffidence, that they are not playing the game with this country if they expect us to take their goods while they buy the goods they require from Japan, because they are cheaper and because they are studying the consumers of their particular countries. I had an opportunity a short time ago of asking a question of the Prime Minister of Australia. I said to him, "You have given us a 15 per cent. preference. Can you tell me if that preference will put one extra yard upon our looms in England?" He was bound to admit that he had studied the consumer, and, if I may say so without being disrespectful, he rather evaded the question. But the fact remains that, while the preferences which we obtained on these commodities may be all right and applicable to the ordinary competition of European countries, they certainly have no bEarlng at all upon the very cheap goods which are produced in Japan.

3.2 p.m.

Mr. HAMILTON KERR: I should like briefly, without any undue repetition of
what my hon. Friend the Member for Elland (Mr. Levy) has already so ably stated, draw attention to the bare facts of Japanese competition in the Cotton Trade. I need not stress the importance of Lancashire and its staple industry to Members of this House. Hon. Members know that during last year Lancashire exported one-sixth of the total visible exports of the country; a total of some £62,000,000 out of £365,000,000. Hon. Members know likewise that out of some 12,000,000 insured workers in this country no fewer than 518,000 of these find their livelihood in the cotton trade. Hon. Members likewise know that a sum of no less than £500,000,000 or more is invested in the various enterprises scattered throughout Lancashire. It can therefore be seen that the prosperity of England cannot be thoroughly restored unless this most important lynch pin in its economic structure can be brought back to some form of prosperity.
The prosperity of Lancashire has been seriously shaken during the last quarter of a century by what I might call the rocket-like outburst of Japanese economic activity. Only a quarter of a century ago Japan exported some 40,000,000 yens' worth of goods, and to-day she exports 1,200,000,000 yens' worth. It was only in 1853, some 80 years ago, that Commander Perry of the United States Navy first entered the harbour of Tokio. From that date Japan has been steadily forging ahead, especially in the cotton trade, where a quarter of a century ago she only had some 750,000 spindles, and now has 6,750,000.
It was during the War, when our manufacturers were concentrating upon fulfilling the needs of our troops on the Western and Near Eastern fronts, that Japan launched her big economic offensive and snatched from us our most potential Eastern markets but, unlike the tailor of Hong Kong, who, when asked to copy a pair of trousers, included the patch as well, the Japanese avoided many of the mistakes which we may possibly have made in our Lancashire cotton industry. They have followed a severe system of rationalisation and centralisation. If we look at the bare facts of the position we see that 70 per cent. of the raw cotton imported into Japan is manipulated by three big firms. We see that the Japanese Cotton
Spinning Association controls no less than 97 per cent. of the spindles in the whole of Japan, while the export of 40 per cent. of the finished yarn is controlled likewise by three big companies. I understand that negotiations are now proceeding with Mr. Matsuoka, the Japanese Ambassador. If so, I presume they will fall within the structure of the World Economic Conference. I presume they will centre round the stabilisation of currencies. The stabilisation of the yen might certainly do something to check Japanese competition, but it can of itself do nothing to check those longer hours and lower wages which place the Japanese in a position of advantage against the skilled and experienced Lancashire workers.
If an agreement cannot be reached—and I see enormous difficulties in its way —is it too much to ask that the Empire should take a united stand against this frontal attack? At Ottawa a new idea was formed, a new economic cement was cast between the British-Speaking nations in the four corners of the globe. This new idea was to pool their resources and to pull together for the common good. If we realise that throughout our Empire there are numerous rich and splendid Dependencies which rely upon us both for Aerial and Naval defence in time of need, is it too much to ask of them that, in consideration for what we give to them, they should give preference to our goods? I will quote only the case of Ceylon. I know that numerous difficulties stand in the way of my right hon. Friend, but when we realise that Ceylon exports to us 112,000,000 rupees worth of goods and takes only 42,000,000 rupees worth in return, while Japanese goods, especially cotton goods, are mounting rapidly month by month in that market, is it too much to ask that the people of Ceylon should give some better consideration to the great Power which protects them and looks after their welfare?
The Lancashire cotton industry, which I say without hesitation or flattery is the most skilled in the world, cannot stand this Japanese onslaught of longer hours, lower wages and reduced standards of living. In this country, throughout 100 years, we have struggled to maintain humane conditions for our workers. We have struggled, often with bitter industrial strife, to maintain a fair ratio of
remuneration, but all these advantages obtained after so much effort and striving will be bound to go by the board if we cannot do something to resist this Japanese competition.

3.9 p.m.

Mr. HAMMERSLEY: The question of Japanese competition is not only a matter of overwhelming preoccupation on the part of the business people of the world but it is also a matter of grave concern to all Governments. As far as our own Government is concerned they have ample information in respect of the volume and character of this grave menace. I drew the attention of the Government nearly 12 months ago to the growing menace of Japanese competition, and there has been given to the House and the country almost day by day increasing evidence of the character of the competition with which the Western world is now faced.
The information which has been given to-day by the hon. Member for Elland (Mr. Levy) requires no expansion on my part. It is sufficient to say that the gravity of this problem cannot be exaggerated and that the scope and extent of it cannot even now be estimated. This is not ordinary business competition. It is an attack on foreign markets in accordance with a national creed; a national creed of economic penetration in which every instrument is co-ordinated to one end. It is a national creed which does not reject the use of a deliberate inflation of the currency, or a piracy of trade marks. It is a policy which results in the clear aim being shown that Japan is aiming at an over-lordship of the East which will rest on a secured and dominant position in many of the markets of the world. Whilst there is a certain amount of truth in the suggestion that we may be pursuing a policy which may result in our losing an Empire, there is no doubt that the policy of Japan is aimed at securing an Empire.
The disquieting part about this competition, this low priced competition based on a low standard of labour, is not that it provides the world with additional quantities of goods which may be given to people who in the past were unable to pay the higher prices; it is not additional goods that are given to the world for its consumption and benefit, these are goods which are displacing existing goods. The trade is what I may describe as a
replacement trade, not an additional trade. It has been suggested with a great deal of truth that these products of low price labour are not finding new markets but are being dumped into markets which are already saturated. There is no export market in the world which is not jeopardised by this abnormal competition. Indeed, home markets, too, are affected. I do not want to give further evidence but I have here a shirt which comes from, Japan, in which the raw material has to be spun and woven, a colour stripe put in it, and a lining, the material has to be cut and stitched and a neck band and buttons put on; it has then to pay a duty, and it can be sold in this country at 1s. including the duty. The weight of the cotton alone is ¾ lb., and if you assume that all the workpeople people in this country engaged in this occupation are working without wages, that no money is provided for Capttal and that the only overhead costs are the payment of rates, it would then cost something like 1s. 6d. to make in this country. We have them dumped in this market at the price of 1s. What are we going to do?
I want to impress on the Government the view that this problem must be taken as a whole. There are four aspects of it. There is the problem of the home market, the aspect of the markets in the Dominions, the aspect of the Colonial markets, and then there is the aspect of those markets which we may describe as the free markets of the world. All these aspects must be considered together and a policy evolved which will deal with all of them. In my view it would be a great mistake to advance a policy which dealt with the problem purely in the home market and failed to deal with it in the Dominions, or which dealt with it in the Dominions and home markets but omitted to deal with it in some way in the free markets of the world. All the aspects of this great problem must be considered. Take the home market first. The figures indicate that the mere putting on of tariffs will not deal with the problem. We must have some system of quantitative restriction. We must possibly deal with the matter in the way that Switzerland deals with it. The aspect of the British markets abroad controlled by the Dominions is another side. When I
speak of the Dominions I include India, because, whether or not in law, India has in fact got fiscal autonomy.
It appears to me that the best way to co-ordinate our policy in respect of the Dominions would be to try to see that the Dominions implement the existing Ottawa Agreements, that by legislative as well as administrative action they make the Agreements reached at Ottawa more fruitful, and we might ask the Dominions in respect of those goods on which we ourselves consider it necessary to have a quantitative restriction, to have a quantitative restriction in the Dominion markets in exchange for our giving to the Dominions an agreement not to include their products in the particular quota scheme which we may put forward in this country—a reciprocal agreement in respect of their goods between ourselves and the Dominions as to quotas.
Then there are the Colonial markets. Here it is necessary, first of all, to free the ground from the impediments and the encumbrances of old treaties which prevent the practical application of the principle of preference. Already the Government have given notice, in respect of West Africa, that the West African colonies will withdraw from the Anglo-Japanese trading agreement. That is so much to the good. But there are many other aspects of the problem which cannot be dealt with in that way. There is the question of markets other than the great. markets of Africa, such markets as Jamaica, Mauritius and so forth. It appears to me that we can with advantage pursue a policy of endeavouring to have some reciprocal arrangements with such countries as France, Belgium and Italy, whereby we could share that great African market, we obtaining from those countries possessions in Africa advantages, in return for our giving advantages to them.
I have had given to me in connection with one of our Colonial markets a letter which I feel it incumbent to quote. It comes from a firm of West Indian merchants. They say—
I feel sure that if the British Government were to ask the West Indian colonies to place a substantial duty on Japanese piece goods, they would do so. In fact I would go further and say that we were very surprised, when the tariff was changed last year at the request of the English Govern-
ment, that while they asked for an increased duty on Japanese shoes, they did not press for an increased duty on Japanese piece (goods. As far as I can make out the request for the increase in the duty on shoes came from Canada who, of course, are not-very much interested in the export of piece goods to the West Indies. It is quite evident that the English Government on this occasion were oblivious of the interest of their own people and did not take the trouble to ask increased protection, as the Canadian Government did.
To the extent that that is true it is a grave charge against the Government—that they are neglecting the interests of this great section of English production. Careful consideration must, and I feel sure will, be given to the question of how we can deal in the Colonial markets with Japanese competition. The fourth aspect of this problem concerns the neutral markets of the world, and there, it seems to me, we could effect a better arrangement by carrying out our existing policy of trade agreements and at the same time freeing ourselves from the embarrassment of the most-favoured-nation clause. By so doing, we could arrange reciprocal advantages with individual countries, which advantages would not of necessity have to be passed on to other countries. As I have said already, we must deal with this problem as a whole and if we look at it in that way it involves the abrogation of the Anglo-Japanese Trade Agreement. It involves giving notice of abrogation now and considering all the details of the problem during the 12 months which must elapse before the abrogation could become effective. It involves, perhaps, a new orientation of British policy and a closer link with the United States.
Conversations with Japan have been started and I believe, although I have no official information, that the Japanese will endeavour to force us to make some proposition, in connection with the problem of competition, to deal with it in piecemeal fashion. I hope the Government will resist any such invitation. It must be dealt with as a whole and procrastination can be of little good. It is not as though the economic war had not started. The economic war is on, and it is high time that we took up a position which will enable us to translate into action the phrase "Empire economic unity." It is high time that we set ourselves to orient our policy so as to enable
us to protect and preserve this great national industry.

3.23 p.m.

Major PROCTER: I am sure every Member who comes from the great county of Lancashire is conversant with the seriousness of this problem. Not long ago Lancashire was in a position to say to the world "We do not fear any sort of competition." With the large hearted generosity which is characteristic of her people she invited students of textile production from all over the world to learn from her how to weave the cloth and how to make the machinery. Students from Japan had free access to our mills where they were taught the art of weaving and the manufacture and use of textile machinery. To-day those whom we taught are our greatest competitors. Lancashire does not complain of competition as such. But we seriously protest against a form of competition which is unfair, which is not founded upon any economic principle except that of destroying for the time the great oversea market for textile goods and supplanting our production by inferior productions.
We Lancashire Members speak for a district that is the most highly industrialised in England. The country within a radius of 40 miles round Manchester is the most densely populated area in these islands. More people live in that area than in London, and we ask, therefore, that the Government should devote their serious attention to this question. There was a time when Lancashire thought that no country could beat it because of its climate, but science has made artificial humidification possible in any climate, and you can now weave textiles in any country in the world. It was thought that the ancestral inheritance of skill that descended from mother to child, from factory worker to factory worker, made the Lancashire cotton operative so skilful that no other nation could compete with her on account of her skill. To-day science has given the automatic loom, and Japan, not having any trade union restrictions that she observes, utilises the automatic loom to destroy all that trade unionism has built up for the workers in this country.
This is a problem that touches the very lives of our working-class people. I have an under-garment here. It can be delivered into the shops in my constituency
of Accrington, duty paid, freight from Japan to London paid, and the nail freight to Accrington paid, and sold at a profit of 7d. per pair. I have a pair of socks here that can be sold retail for 2d. We cannot preserve the standard of life of the Lancashire working man if the Government of this country permit the entrance of these goods. I recognise full well that on a purely Free Trade theory Japan should be permitted to sweep the Lancashire products out of existence, but we cannot deal with the problem purely from the Free Trade point of view, because if the Free Trader is true to his convictions, he must say, "We are not the best fitted for this kind of work. It does not matter if Lancashire industry, if Darwens cotton trade goes out of existence, Japan should cut us out if she will, because she is better fitted than we are. Let Free Trade principles continue, even though the industry dies."
I suggest that the Government should tackle the problem of Japanese competition along four different lines. First, notice should be immediately given for the abrogation of all the Treaties that we have made, including the most-favoured-nation clause, that permit Japanese entrance into our Colonial markets. I know that some of these Treaties are bound up with the very title deeds on which we hold great expanses of territory, but as it takes 12 months for these treaties to be abrogated, we should give notice at once. Lancashire cannot wait for 12 months before the Government do something to kill this competition, which we regard as unfair. The second line of approach is through the Economic Conference. Why do not the Government try to preserve a high standard of living for civilised people, to secure that every nation that sends its goods to another nation should have a certain minimum standard of life for the people who manufacture those goods? The third line is to get the voluntary curtailment of Japanese imports into India. This can be done by co-operation with the Indian Government. The fourth line is to put a ring fence clean round the Empire so that until Japan pays its operatives more than 2d. an hour and works them for less than 10 hours a day and seven days a week, and until Japan gives her people
a standard of life comparable to our own, Japanese goods should not be allowed to enter the territories of the British Empire at all.

3.31 p.m.

Lieut-Colonel J. COLVILLE (Secretary, Overseas Trade Department): The subject which hon. Members have raised to-day is a very important one, and one which is giving eoncern to His Majesty's Government at the present time. Hon. Members have raised the question of Japanese competition in only artificial silks and cotton goods, but the problem is a wider one even than that and covers a wider range of products than those mentioned.

Mr. LEVY: I mentioned a number.

Lieut.-Colonel COLVILLE: Hon. Members, at any rate, have stressed particularly those products with which they were most familiar, and the cotton industry is the one which has suffered the most from this particular competition. I want to make it plain that that competition is not confined only to the two types of goods of which we have heard most during this Debate. It is very important to remember not only the wide range of products, but the wide range of markets in which this competition is felt. It is most serious in the case of textiles, cotton and artificial silk. Complaints are also made of Japanese competition in such things as pottery, rubber foot wear of certain types, of cement and other things which I could name. The difficulty has naturally risen most acutely in the markets of the East—in China, East Indies, India, East Africa and many other places, and it is not restricted to those markets, but includes also the United Kingdom market. So my hon. Friend the Member for Stockport (Mr. Hammersley) was quite right in dividing the problem, as he did, into four heads—the home market, Dominion markets, Colonial markets and foreign markets. Those who talk lightly about immediate action and drawing a ring fence round this and that must remember that the width and complexity of the problem make it impossible to deal with it in that way.
Let us examine the details of the problem. Why is Japanese competition so intense and what gives them their advantage? The advantages of Japanese
exporters over their competitors are usually ascribed to the low cost of labour in Japan. When one makes all allowances for other factors, as I am going to do, I am bound to express the view that that factor enters very largely into their competitive power. Something is also due to the organisation of Japanese industry and their efficiency of production. It is right that that should be said. Hon. Members have already stressed that point about Japanese industry, and it would be a mistake to imagine that it is in any way inefficient in its conduct. It is exceedingly efficient. There is also the fact that the heavy depreciation of the yen has recently given a considerable competitive advantage to them. It has been suggested in some quarters that Japanese competition is greatly assisted by Government subsidies in Japan. That is a matter into which we have made full inquiries, of course, but I am bound to say that, so far as the evidence that we have goes, there is no information that Government subsidies are on a scale sufficient to make any great difference to the price.

Sir WILFRID SUGDEN: Would the hon. and gallant Member suggest that there is no preferential rating of any kind in regard to the industrialists and the manufacturers in Japan?

Lieut.-Colonel COLVILLE: I suggest that the examination of the particular question of Government cash assistance shows that that is not the cause of the real competition. Certainly we have evidence that the Government do spend some money in facilitating organisations for export, but that is done in other countries too, and the extent to which it is done in Japan is not what gives them their real competitive advantage by comparison with these other factors, the low cost of labour and the depression of the yen. As I have said, their very efficient production ought to be recognised by those in this House and the people in the country. The hon. and gallant Member for Accrington (Major Procter) suggested that it was a pity that we had ever taught them their craft in our mills and factories. There I cannot agree with him, because people who are out to learn a craft will learn it in any case, whether in this country or another.
At any rate, we must face the facts as we find them, and I have given the principal causes which make Japan so highly competitive at the present time in all these markets—home, foreign, dominion and colonial. The growth of Japanese exports to markets in which United Kingdom manufacturers are vitally interested have naturally led to demands for counter measures either in the form of high duties or quantitative restriction. Particularly has it led to a demand for discriminatory action against Japan by the abrogation of the Anglo-Japanese Treaty, which would enable special duties to be applied. It has also been mentioned in the House to-day, and is well known, that the Government of India have taken action. The action they have taken has been to give notice of the determination of the Treaty with Japan, which will enable them to take special measures in regard to Japanese imports if they so desire when the Treaty runs out.

Mr. SLATER: Has the hon. and gallant Member any news of the Japanese buying up Indian mills—we hear a lot about that —as a consequence of the tariff? It is just what they did with the Shanghai mills.

Lieut.-Colonel COLVILLE: I must ask my hon. Friend to allow me to develop my speech. I have not got that news. If he cares to bring the matter before me I will look into it with him. I have said that the Government of India are taking action, but the problem which faces them is quite a different one from that which faces this country. They are concerned only with the preservation of the Indian market, and we are concerned with helping our manufacturers in all markets overseas, whether colonial, dominion or foreign, and at the same time helping them in the market at home. The decision of the Government of India was a simpler one than that which hon. Members are asking His Majesty's Government to take, because our problem is wider.
So far as the home market is concerned, the machinery under the Import Duties Act provides an opportunity for British industry to obtain additional Protection by tariff where it can be shown to be necessary. Although it has been said that tariffs have been quite ineffective
for dealing with this situation, so far there is nothing to show that the measures taken under the Import Duties Act in the case of rubber boots and shoes, for instance, are inadequate to deal with the competition in that particular range of goods. The silk and artificial silk duties are Budgetary duties, and hon. Members will probably have noticed that there is a Clause in the Finance Bill giving power to increase the duties by Treasury Order on the recommendation of the Import Duties Advisory Committee.

Mr. LEVY: They are no longer Budgetary duties. We are waiting for the reports of the Imports Advisory Committee.

Lieut.-Colonel COLVILLE: Yes, that had to be regularised by putting a Clause in the Finance Bill. To return to the foreign markets, there is obviously no direct action that the Government can take. Any action that is taken must be by agreement, and that has been stressed already. As regards the Dominions, hon. Members are aware that, as the result of the Ottawa Conference, the Dominions have given this country certain ranges of preference, and there, again, the fiscal autonomy of the Dominions has to be recognised. I might add that our exports to Australia, New Zealand and India have increased during the last 16 months, and we are very anxious to increase that rate of improvement if we can.

Sir H. SAMUEL: How much is the increase?

Lieut.-Colonel COLVILLE: I have not the figures before me, but I have the impression that the increase is very substantial. As regards the Colonies, in most of the Colonies British goods already enjoy the advantage of Imperial Preference, and, in particular, the Majority of Colonies have recently amended their tariffs with a view to assisting British exports, and British cotton exports particularly. In East and West Africa it is not possible, owing to international obligations, to introduce Imperial Preference. That brings me to what action has been taken by the Government in regard to West Africa, In West Africa the Lancashire trade up to the present time has not been seriously affected by Japanese competition, but it
is very evident that that competition might become more intense.
I now come to the action which the Government have taken up to the present in this matter. It is not the lack of appreciation of the serious nature of the problem that causes the Government to move cautiously. It is because it is an immensely complex problem, and it is desirable that it should not be treated other than as a wide problem. Therefore, at the end of April the President of the Board of Trade saw the Japanese Ambassador, and frankly placed before him the gravity of the position. During that talk it was made quite plain to the Japanese Ambassador that His Majesty's Government viewed the position as one of grave difficulty especially for our textile industry, and the suggestion was made that an endeavour should be made in the first place to arrange a conference between the Japanese industries and the United Kingdom industries with a view to the mutual allocation of markets throughout the world; that is to say, that His Majesty's Government were to use their good offices to bring together the industries of the two countries to discuss this matter. But before doing so, to show the importance which the Government attach to that Conference, the President himself had this talk with the Japanese Ambassador, assured him of our views in the matter and asked his Government to consider and give a reply as to the calling together of such a conference, and to outline the end in view.
A reply has now been received from the Japanese Government, and that reply is at present under consideration. I am not able to discuss it in the House to-day as it was only received a very few days ago, and it is under close consideration at the present time. After that meeting was held, the President of the Board of Trade, through the usual channels, gave notice that the West African Treaty must he abrogated. I referred to that before in my speech.
I should like to give our reasons why we took that action. The West African market is of great importance to Lancashire, and Japanese competition has made Lancashire particularly anxious that action should be taken immediately. The position of the larger West African
Colonies, Nigeria and the Gold Coast, differs from that of our other Colonies, in that the operation of the Anglo-French West African Convention of 1898 precludes the imposition of any preferential rates of duty. The Japanese were entitled to most-favoured-nation treatment in those West African territories, under the Anglo-Japanese Commercial Treaty of 1911. Notice has now been given of the withdrawal of those West African. Colonies from the Treaty, and this action leaves those Colonies free, at the end of one year from 16th May, the date of notice, to impose special rates of duty upon Japanese goods. That notice was given as a sign that we feel it necessary to take preliminary action to show that we are gravely disturbed on the question, and that we intend to take such action, in the case of this market, to give better security to our exporters. That has been stressed throughout during the Debate.
The question is not one of that market merely, but is a much wider one. That is why the Government feel that, in the first instance, the move to take is to make an earnest attempt to obtain an understanding between the industries of the two countries as to the allocation of the market. Hon. Members may say that that is a very difficult thing to do. I agree that it is, but it is with the knowledge that understanding and agreement are better than compulsory methods, that the Government are attempting to get an understanding and a conference on this matter. As I have said the reply of the Japanese Government to our suggestions has been received, and is under very close consideration. If the Conference can be brought together—and we shall lose no time in our attempts to bring it together—His Majesty's Government will follow the discussions with the closest interest and attention, and will endeavour to facilitate the negotiations in any way they can.
Hon. Members have referred to the World Economic Conference which is assembling here shortly. Earlier in this Debate the Chancellor of the Exchequer made it quite clear that the question of overproduction was one which would be very prominently before the Conference. Overproduction may take place, not only in agricultural produce, but in other pro-
ducts as well. It will be remembered that all the nations attending this Conference —I think there are some 61 nations—are not interested in selling in the same trades, and an attempt to get a general agreement among all these nations on a subject of this complexity, and upon which there is bound to be controversy, is a difficult undertaking. None the less, the broad question that has been put forward by the Chancellor of the Exchequer, in regard to overproduction, is one which is prominently before His Majesty's Government, and that will be remembered during the conduct of the Conference.
That does not mean that we should not try to make an immediate start to face this particular problem of Japanese competition in. all parts of the world. I think that His Majesty's Government has given evidence of the importance which they attach to this problem. They have given evidence in their contact with the Japanese Government, by showing how gravely they fear for the future of those industries which may be affected by that competition unless an understanding is arrived at. We wish that understanding to be arrived at by voluntary means. We are anxious that the industries of the two countries shall come together and face this problem in such a way as may result in an equitable solution. They made it plain, however, that they do not intend to cease to take an interest in it at the point when the discussions start, but that they intend to watch them closely and to give all support that may be proper and necessary to the reaching of a solution which may be helpful to our industries. I cannot say more than that at the moment. Hon. Members would naturally have been pleased if I could have given them the gist of the Japanese reply, and of the reply, now in preparation, which we shall be sending to Japan, but, obviously, I cannot do that while the discussions are going on. I can only say that His Majesty's Government are fully impressed with the gravity of the question, and will lose no opportunity of pursuing their policy, which they believe will lead to a solution of the difficulty.

Sir W. SUGDEN: May I ask my hon. and gallant Friend a question? Will the
organised manufacturers, spinners and operatives be made aware of the decision, so that they can consider it among themselves before the World Economic Conference meets?

Lieut.-Colonel COLVILLE: Yes, Sir; I can assure my hon. Friend that the Government will keep in close touch with the organised trade in connection with the discussions on Japanese competition which are, of course, to be carried on quite distinctly from the World Economic Conference. Important meetings were held of representatives of the cotton trade at the Board of Trade earlier this year, to discuss the various aspects of the problem, and the Government will keep in close and active touch with the trade in this matter.

Mr. LEVY: My hon. and gallant Friend stressed, very properly, the question of over-production, but I want to emphasise, not so much the over-production, but the low production costs, against which no European country can compete.

Lieut.-Colonel COLVILLE: I think I have made it plain that we are aware that low production costs are one of the main features which make this competition so difficult to meet.

3.53 p.m.

Mr. SUTCLIFFE: The House will have heard with pleasure the statement of my hon. and gallant Friend that the Government are keeping this matter very much before them, and intend to do all that they possibly can at the earliest possible moment to come to voluntary agreements on the whole matter of Japanese competition. I agree with my hon. and gallant Friend that the best, and, in fact, the only way is to come to an agreement by voluntary co-operation. I should like to direct the attention of the House rather to the Japanese competition in China, about which we have not heard so much to-day. There are very large British interests in Manchuria, and there is a great hope that those interests will expand more and more as time goes on. Manchuria is one of the coming countries of the world. It has a vast and growing population, 95 per cent.
of whom are Chinese, and there is a great danger of losing this market altogether unless a firm line is taken as quickly as possible.
China ranks next to India as the greatest country receiving Lancashire cotton piece goods. In 1932, we exported 72,500,000 square yards of cotton piece goods to China, and, in the three years before 1932, we increased our trade out there by something like 80 per cent., getting back a great deal of the trade that we had lost in previous years owing to the disturbed state of the country. There is a very good market there for a really first-class article, in fact, just such an article as the Lancashire cotton mills turn out. The population consists largely of agriculturists who have good markets for their produce and, therefore, can afford a really good article, and could buy exactly the sort of article that we could sell. But our trade there has suffered greviously ever Since Japan extended her influence. Many firms have closed down, and even some of the banks are now closing down because of the ending of the open-door policy of equal trading.
Do not let us make the same mistake that we made with India. We made a fatal mistake soon after the War when we granted fiscal autonomy to India and gave away our market. There is a certain danger of this happening, but I am sure the Government is alive to the situation from Replies they have given to Questions during recent months. The Foreign Office has told us that it made representations about the evasion of Customs Duties. We could not compete with people who were evading Customs Duties when British traders were paying full duty, but to a certain extent that has been remedied. Japan has now complete control over Manchuria and great care will have to be taken to ensure that the British market there is not entirely lost. Japanese competition is based on the cheapest of cheap labour and is backed by militarism and force, which makes it more difficult than ever for the British trader to hold his own. The economic problem is to keep open these markets where they exist. There are
very few left and I hope this one will he saved while there is yet time. We are only asking for what we are entitled to. Japan, amongst other Powers, agreed to the open door in Manchuria, just as we ourselves did. There is not the least reason why we should modify our attitude, and I ask the Government to show a firm hand, because such a great
deal depends upon the volume of trade which we can get in China to keep our cotton mills going.

Question, "That this House do now adjourn," put, and agreed to.

Adjourned accordingly, at One Minute before Four o'Clock, until Tuesday, 13th June, pursuant to the Resolution of the House this day.